Metric analysis

Treasury yields fall as key inflation gauge shows possible slowing in price rises

U.S. Treasury yields fell on Friday morning as fears over the Federal Reserve’s plans to aggressively raise interest rates appeared to ease and a key inflation reading showed a slowing in price increases. .

The yield on the benchmark 10-year Treasury note fell 1 basis point to 2.743%. The yield on 30-year Treasury notes fell 2 basis points to 2.972%. Yields move inversely to prices and 1 basis point equals 0.01%.

On Friday, the Fed’s preferred measure of inflation showed a 4.9% year-over-year rise in April. This result is in line with expectations and could be a sign that inflation is starting to come down.

Bhanu Baweja, chief strategist at UBS Investment Bank, told CNBC’s “Squawk Box Europe” on Friday that his firm believes inflation has peaked and readings on price growth may begin to decline.

“In the meantime, we think the US economy is in decent shape, no doubt it’s a late cycle but recession is not imminent, and besides, I don’t think the markets think it’s imminent,” Baweja said.

Treasury yields have mostly fallen this week as investors seek shelter from strong selling in equity markets. Disappointing earnings from a number of tech stocks fueled fears that a slowdown in economic growth is starting to show through in corporate data.

The Fed’s plans to aggressively raise interest rates to fight inflation had investors concerned it could contribute to an economic slowdown.

CNBC Pro Stock Picks and Investing Trends:

Minutes from the central bank’s May meeting, released on Wednesday, showed the Fed felt it needed to raise rates quickly and potentially go further than the market had expected. However, shares rose on Wednesday afternoon, indicating investors were largely unsurprised by the minutes.

In terms of economic news, personal income rose 0.4% in April. Economists polled by Dow Jones were looking for a 0.5% gain.