U.S. Treasury Yields Slip as Investors Digest Inflation Data

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U.S. Treasury yields slipped on Friday, cooling off after a spike early in the day as concern over persistently high inflation and the prospects of tighter Federal Reserve policy for longer grew.

The yield on the 10-year Treasury hit its highest level since November, reaching a high of 3.929% before trading lower. It was last down about 2 basis points at 3.822%. The 2-year Treasury yield also reached levels not seen in three months, and was little changed 4.625%.

Yields and prices have an inverted relationship and one basis point is equivalent to 0.01%.

Thursday's producer price index reading for January came in higher than expected, causing investors to fret about inflationary developments and upcoming Fed monetary policy decisions.

Wholesale prices increased by 0.7% on a monthly basis in January after having declined by 0.5% in December. Economists previously surveyed by Dow Jones had expected January's PPI to rise by 0.4%.

Data released earlier this week showed that consumer inflation rose by 0.5% in January, which was also a larger-than-expected increase.

Several Fed speakers hinted at further interest rate hikes after the data was released on Thursday. The central bank has been using rate increases as a tool aiming to cool the economy and ease inflation.

Many investors have been hoping for the central bank to pause rate increases this year as they are concerned that high interest rates will cause the U.S. economy to contract.

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