After ending the previous session little changed, treasuries showed a modest move to the upside during trading on Thursday.<\/p>\n
Bond prices moved higher in morning trading but gave back some ground in the afternoon. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell 2.5 basis points to 4.093 percent.<\/p>\n
The ten-year yield moved lower for the fourth straight session, dropping to its lowest closing level in three weeks.<\/p>\n
Treasuries benefited from continued optimism about the Federal Reserve leaving interest rates unchanged after the Commerce Department released a report showing consumer price growth in the U.S. accelerated in line with economist estimates in the month of July.<\/p>\n
The Commerce Department said the annual rate of consumer price growth increased to 3.3 percent in July from 3.0 percent in June. The faster growth matched expectations.<\/p>\n
The reading on inflation also showed consumer prices rose 0.2 percent on a monthly basis in July, matching the uptick in June as well as economist estimates.<\/p>\n
The report also said the annual rate of growth by core consumer prices, which exclude food and energy prices, inched up to 4.2 percent in July from 4.1 percent in June. The modest increase also matched expectations.<\/p>\n
Core consumer prices rose by 0.2 percent on a monthly basis in July after edging up by 0.2 percent in June, in line with estimates.<\/p>\n
The readings on prices for personal consumption expenditures are said to be the Federal Reserve’s preferred gauges of inflation.<\/p>\n
“July PCE inflation was modest for a second straight month, establishing a solid runway for the Fed to leave rates unchanged next month,” said Chris Low and Will Compernolle, FHN Financial Chief Economist and Macro Strategist.<\/p>\n
They added, “There is one more CPI report before the September FOMC meeting (coming during the pre-meeting quiet period) that could shift the FOMC’s inflation confidence when setting rate and inflation projections for the year ahead.”<\/p>\n
Buying interest remained somewhat subdued, however, as traders seemed reluctant to make significant moves ahead of the release of the closely watched monthly jobs report on Friday.<\/p>\n
Economists expect employment to increase by 170,000 jobs in August after climbing by 187,000 jobs in July, while the unemployment rate is expected to remain at 3.5 percent. <\/p>\n