AP News, March 16th, 2007
U.S. Treasury bond prices were mildly lower Friday after an inflation report came in a touch higher than expected _ suggesting price pressures are still prevalent _ and as U.S. industrial production rebounded.
At 11 a.m. EDT, the 10-year Treasury note was down 94 cents per $1,000 in face value, or 3/32 point, from its level at 5 p.m. Thursday. Its yield, which moves in the opposite direction, rose to 4.55 percent from 4.54 percent.
The 30-year bond fell 3/32 point. Its yield rose to 4.70 percent from 4.69 percent.
The 2-year note fell 1/32 point. Its yield rose to 4.60 percent from 4.58 percent.
Yields on 3-month Treasury bills were 5.03 percent as the discount rate fell 0.01 percentage point to 4.90 percent.
Treasury bonds, already down a bit at the start of New York trade, posted modest losses after the Labor Department reported that the headline consumer price index edged up in February, though core inflation was tamer than it was the month before. Bonds then lost further ground after both industrial production and capacity utilization rose in February.
"It seems like we're focusing more on the data and the Fed (Friday)" than equities, said Carl Lantz, fixed-income strategist at Credit Suisse in New York. "And looking at the data as a whole, it's pretty clear the Fed is not going to drop its inflation bias," he said.
Early Friday, the Labor Department said the consumer price index rose by 0.4 percent in February. Economists had been expecting a 0.3 percent rise. The core CPI number, however, rose by 0.2 percent, as expected, after rising 0.3 percent in January. Core inflation excludes food and energy prices, which are considered more volatile.
Taken together Thursday's producer price index, the reports suggest price pressures perhaps aren't waning quite as Fed officials had suggested they would. Officials have said they may have to raise interest rates if inflation doesn't abate as anticipated. The Federal Open Market Committee will meet again to discuss monetary policy next week.
Also Friday, the Federal Reserve reported that U.S. industrial production rose 1 percent in February, more than expected. Output decreased 0.3 percent in January, revised down from a previously estimated 0.5 percent decrease.
