Treasury yields decrease as investors consider the inflation perspective

January 20, 2023: On Thursday, Treasury yields decreased as investors digested wholesale inflation figures and awaited words from Federal Reserve lecturers.

The yield on the 10-year Treasury benchmark was last lower by one basis point and trading at 3.364%. The 2-year Treasury traded at 4.067% after falling by nearly one basis point.

Yields and prices shift in opposite directions; one basis point is equivalent to 0.01%.

The December producer price index report on Wednesday showed wholesale inflation decreased more than anticipated every month. It declined by 0.5% instead of the 0.1% predicted by economists previously surveyed by Dow Jones.

Paired with the previous week’s consumer price index print, which reflected that consumer prices decreased by 0.1% in December, some investors are now assessing whether the peak of inflation has overgone.

The inflation readings could inform if the central bank will announce another 50 basis point hike or slow the speed of increases to 25 basis points after its next meeting on February 1.

Many think that for the central bank to slow or completely stop rate hikes this year as the speed of rate increases put by the Fed in its fight against the increased inflation has sparked recession fears.

Investors are, therefore, closely after the remarks from Fed speakers, who have shown a mixed picture so far. Boston Fed president Susan Collins is because of the make remarks.

Investors have been parsing through the recent data and Fed remarks for clues on the increasingly high rates will go. But, while recent numbers point to easing the inflation, JPMorgan Chase CEO Jamie Dimon thinks prices will top 5%.

“I think there’s much of an underlying inflation, which will not go away so quickly,” Dimon told from the World Economic Forum in Davos, Switzerland.