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Bond Report: Treasury yields fall, led by 10-year rate, as stocks remain under pressure


Treasury yields fell Thursday morning, as government paper found support from apparent safe-haven flows and stocks continued to lose ground on inflation fears.

What are yields doing?

The yield on the 10-year Treasury note

fell to 2.849%, down from 2.918% at 3 p.m. Eastern on Wednesday. Yields and debt prices move opposite each other.

The 2-year Treasury yield 

slipped to 2.582% from 2.629% Wednesday afternoon.

The 30-year Treasury bond yield

was at 2.993%, down from 3.04% late Wednesday.

What’s driving the market?

Yields were declining as U.S. stocks opened lower Thursday, a day after the Dow Jones Industrial Average DJIA, -1.02% fell for a fifth straight session and the S&P 500 SPX, -1.65% ended at its lowest in more than 13 months.

Data released on Thursday showed that the cost of wholesale goods and services rose a milder 0.5% in April versus the prior month, but intense inflationary pressures showed little signs of relenting.

The increase in wholesale prices over the past year, meanwhile, slowed to 11% from 11.5%, the government said Thursday. That’s the first drop since the pandemic started, mirroring a decline in the rate of consumer inflation last month.

Meanwhile, U.S. jobless claims settle just above 200,000 mark for the most recently reported week. Initial jobless claims rose 1,000 to 203,000 in the week ended May 7, the Labor Department said Thursday.  Economists had expected a fall to 194,000.

What do analysts say?

“The PPI release, like yesterday’s CPI release, shows that overall inflation is starting to slow despite ongoing increases in food and energy prices,” said Bill Adams, chief economist for Comerica Bank. Even so, “the April PPI and CPI reports will not dissuade the Fed from making another half percentage point rate hike when they next meet in mid-June.”

“The Fed will want to see clearer evidence that inflation is cooling and higher interest rates are slowing demand before they start thinking about the endpoint of the current rate hike cycle,” Adams wrote in an email.

: Good luck finding a cheap airline fare this summer. Airfare costs soared 18.6% from March to April, hitting a five-year seasonal high.

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