Yields on longer-dated U.S. Treasurys slipped on Friday as investors digested the previous day’s economic data, and looked ahead to another inflation reading.
The yield on the benchmark 10-year Treasury note fell 1 basis point to 4.118% at 6:32 a.m. ET, while the 30-year bond yield also dipped 1 basis point to 4.365%.
The yield on the 2-year Treasury note was flat at 4.316%. Yields move inversely to prices, and a basis point equals 0.01%.
It comes after gross domestic product data for the U.S. came in well above expectations in the fourth quarter, with the economy growing at an annualized rate of 3.3% — higher than economists’ expectations of 2%.
Meanwhile, inflation continued to slow. The core personal consumption expenditures price index — which the Federal Reserve monitors for longer-term inflation trends — rose by 2.7% on an annual basis, down from 5.9% a year ago.
Investors are closely monitoring the economic data for hints as to when the Federal Reserve might start to cut interest rates.
“Although GDP growth came in hotter than expected in the fourth quarter, underlying inflation continued to slow, with annualised core PCE inflation running at the 2% target in the fourth quarter,” said Paul Ashworth, chief North America economist at Capital Economics. “The upshot is that an early spring rate cut by the Fed is still the most likely outcome.”
Data scheduled for Friday includes December’s personal consumption expenditures price index, a preferred inflation measure for the Federal Reserve. Core PCE prices are expected to have gained 3% in December on a year-over-year basis, according to economists polled by Dow Jones.