U.S. Treasury yields rose on Friday as investors digested new consumer sentiment data that points to greater inflation expectations.
The benchmark 10-year Treasury yield was 3 basis points higher at 4.306%. The 2-year Treasury yield was up 6 basis points at 4.013%.
One basis point is equal to 0.01% and yields move inversely to prices.
A survey from the University of Michigan showed that consumer sentiment dropped in March to 57.9. That’s well below the Dow Jones consensus estimate of 63.2. The report also showed consumer expect inflation of 4.9% over the next year, up from 4.3% last month.
“While current economic conditions were little changed, expectations for the future deteriorated across multiple facets of the economy, including personal finances, labor markets, inflation, business conditions, and stock markets. Many consumers cited the high level of uncertainty around policy and other economic factors; frequent gyrations in economic policies make it very difficult for consumers to plan for the future, regardless of one’s policy preferences,” Surveys of Consumers director Joanne Hsu wrote.
Andrew Brenner of NatAlliance told clients in a note that the report “could not be more stagflationary.” He added: “The inflation numbers will scare and skew the Fed meeting next week.”
The Federal Reserve is set to meet next week. To be sure, traders largely expect the central bank to keep rates at their current levels, per the CME Group’s FedWatch tool.
