US Treasuries retreat, inflation creeps higher
NEW YORK, April 29 (Reuters) - U.S. Treasury debt prices were lower on Friday as profit-taking on recent hefty gains dominated trading, while a key reading on underlying U.S. inflation rose in line with expectations.
The benchmark 10-year Treasury note <US10YT=RR> was off 12/32 in price, while yields rose to 4.19 percent after finishing at a 10-week trough of 4.15 percent on Thursday.
The price index for personal consumption expenditures excluding food and energy, or core PCE, rose 0.3 percent in March. That matched forecasts, though some in the market had been hoping for only a 0.2 percent gain.
On a year-on-year basis, the core PCE rose to 1.7 percent from 1.6 percent in February, still within the Federal Reserve's presumed 1.0 percent to 2.0 percent comfort zone.
However, expectations for further Fed interest rate hikes were reinforced by an article from Fed watcher Greg Ip in the Wall Street Journal in which asserted the U.S. central bank was more worried about inflation than slowing growth.
"Core inflation remains subdued," said Steven Wood, chief economist at Insight Economics. "But we expect the FOMC will continue to raise their target funds rate at a "measured pace." We look for another 25 basis points increase at the May 3 meeting."
There have also been several reports suggesting the Fed's rate-setting Federal Open Market Committee next week will drop its reference to "measured" rate hikes. A few weeks ago such a move might have caused fears the Fed would shift to larger hikes but the recent soft data has convinced many in the market that half-percentage-point moves are highly unlikely whether the Fed drops the term "measured" or not.
Still, the Ip article was enough to quash any talk about a near-term pause by the Fed and hit the short end of the Treasury market. The two-year note <US2YT=RR> dropped 4/32, taking yields back up to 3.64 percent from 3.56 percent.
The five-year note <US5YT=RR> lost 10/32, lifting yields to 3.88 percent from 3.82 percent. The 30-year Treasury bond <US30YT=RR> suffered relatively less, as yields rose to 4.51 percent from 4.49 percent.
With short-dated debt underperforming, the spread between two- and 10-year yields shrank to 55 basis points -- the lowest reading since early 2001 and a sharp fall from 75 basis points just a couple of weeks ago.
Also out were figures on consumption which showed U.S. real personal spending rose a muted 0.1 percent in March, while income was up 0.5 percent. The employment cost index also rose a modest 0.7 percent, suggesting little inflationary pressure from that quarter.
"Although real consumer spending was strong it has slowed for two consecutive quarters and finished Q1 with very little momentum," added Wood at Insight. "In order to sustain recent strength in real consumer spending, job creation will need to accelerate further."
Still to come on Friday is the Chicago purchasing management survey for April and the final University of Michigan report on consumer confidence.
The Chicago numbers will be important as many analysts argue that economic softness seen in March was merely a passing phase, in part due to the distorting effects of an early Easter holiday. To prove them right, the bulk of the April data need to show a strong bounce in activity.
The Chicago PMI is unusual in that it was one of the few series that strengthened in March and, while analysts are looking for a pullback in April, they still expect the main activity index to stand at a historically healthy 63.9.
The early April report on consumer confidence showed a steep drop to 88.7, from 92.60 in March, and forecasts are the final reading will show only a slight improvement to 89.0.
con sti pazzi mai dire mai , resta da vedere se alla fine il bleffarolo è il nonnetto: se è così una volta in pensione andiamo a Tampa bay a fargli il chiulo a stelle e strisce roventi
hai messo una lucina rossa per segnalare le pressioni pericolose? 
