By Daniel Kruger
U.S. government bond prices climbed Tuesday after data showed inflation cooling slightly last month.
The yield on the benchmark 10-year U.S. Treasury note fell for a second- consecutive day to 2.848%, its lowest closing level since March 1, from 2.870% Monday. Yields fall as bond prices rise.
The 10-year yield fell after the Labor Department said Tuesday that U.S. consumer prices rose moderately in February, although at a slightly slower pace than the month before. The consumer-price index, which measures what Americans pay for everything from washing machines to hotel stays, rose 2.2% in the year to February, below the 2.3% estimated by economists surveyed by The Wall Street Journal.
Core prices rose 1.8% for a third-straight month, also below economists' expectations, suggesting that inflationary pressures are still muted. Tuesday's data comes after last week's jobs report showed tepid wage gains, easing concerns of a sharper-than-expected pickup in inflation that prompted selling in government debt earlier in the year.
Inflation poses a threat to the value of government bonds because it chips away at the purchasing power of their fixed payments.
"Everybody was looking for some kind of inflation to pop-up after that January report and we just haven't seen it," said Thomas di Galoma, managing director and head of Treasury trading at Seaport Global Holdings. With concerns growing about the impact of an increasingly contentious environment for global trade and rising market volatility, "we're getting more speculation that four rate hikes is too many."
U.S. government bonds extended their gains after President Donald Trump said in a statement on Twitter that he is replacing Secretary of State Rex Tillerson with Central Intelligence Agency director Mike Pompeo.
Write to Daniel Kruger at Daniel.Kruger@wsj.com
(END) Dow Jones Newswires
March 13, 2018 16:39 ET (20:39 GMT)
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