Treasuries Move Notably Higher Following Inflation Data

(RTTNews) - After showing a lack of direction early in the session, treasuries moved notably higher over the course of the trading day on Tuesday.

Bond prices climbed firmly into positive territory after lingering near the unchanged in early trading. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slid 4.1 basis points to 4.256 percent.

The ten-year yield added to the 1.8 basis point dip seen on Monday, dropping to its lowest closing level in almost a month.

The strength among treasuries came after the Labor Department released a report showing tamer-than-expected producer price inflation in the month of March.

The Labor Department said its producer price index for final demand climbed by 0.5 percent in March, matching a downwardly revised increase in February.

Economists had expected producer prices to jump by 1.2 percent compared to the 0.7 percent advance originally reported for the previous month.

The report also said the annual rate of growth by producer prices accelerated to 4.0 percent in March from 3.4 percent in February, while economists had expected the pace of growth to surge to 4.6 percent.

"PPI rose at a much slower than expected rate in March, offering Fed officials some comfort the conflict won't spark a sustained inflation shock that could derail their rate cutting hopes," said Nationwide Market Economist Oren Klachkin.

He added, "Looking ahead, we're anticipating a hot PPI report for April, but do not see this evolving into a sustained inflation shock."

Treasuries also benefitted from a sharp pullback by the price of crude oil, which fell sharply amid optimism about a second round of talks between the U.S. and Iran over ending the Middle East conflict.

President Donald Trump said on Monday the U.S. has been contacted by Iran about resuming peace talks and claimed, "They'd like to make a deal very badly."