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TREASURIES-Yields drift higher ahead of slate of Fed speakers

·3-min read

CHICAGO, April 14 (Reuters) - U.S. Treasury yields rose on Wednesday as several Federal Reserve officials, including Chair Jerome Powell, were set to speak in the wake of the latest inflation data. The benchmark 10-year yield was last up 1.5 basis points at 1.6376%. Yields tumbled on Tuesday after a strong auction of 30-year bonds and U.S. consumer prices data that showed while underlying inflation picked up in March, it was not rising wildly as the economy recovered from the coronavirus pandemic. "It's more likely yields drift higher from here, and the reason is we're just getting a lot of positive global economic data," said Kathy Jones, chief fixed income strategist at the Schwab Center for Financial Research in New York. "Although yields have moved up a lot, really 1.60% on the 10-year is not all that high when you think about the global economy reflating and growing." As for the Fed speakers, she said they will continue to insist the inflation numbers are transitory, but "will have to reconcile the better-than expected economic data with their projections for staying on hold". Dallas Federal Reserve Bank President Robert Kaplan said on Wednesday that the central bank should reduce its "extraordinary measures... at the first opportunity once we've reached, and are reaching, some of these benchmarks". Those include the weathering of the pandemic and progress toward full employment and 2% inflation. Later on Wednesday, the Fed will release its Beige Book, a compendium of data and anecdotes gathered by each of the 12 regional Federal Reserve banks on current economic conditions, based on surveys of and interviews with key business contacts. Jones said the market will be looking at how serious and widespread are price pressures for companies in various areas, and what they may be saying about employment and wage prospects. The two-year Treasury yield, which typically moves in step with interest rate expectations, was last less than a basis point higher at 0.1649%. A closely watched part of the yield curve that measures the gap between yields on two- and 10-year Treasury notes was last 1.74 basis points steeper at 147.45 basis points. April 14 Wednesday 9:49AM New York / 1349 GMT Price Current Net Yield % Change (bps) Three-month bills 0.02 0.0203 0.000 Six-month bills 0.04 0.0406 0.000 Two-year note 99-236/256 0.1649 0.004 Three-year note 100-10/256 0.3619 0.011 Five-year note 99-114/256 0.8645 0.025 Seven-year note 99-156/256 1.3089 0.021 10-year note 95-92/256 1.6376 0.015 20-year bond 94-148/256 2.2141 0.019 30-year bond 90-164/256 2.3108 0.003 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 11.50 0.00 spread U.S. 3-year dollar swap 12.00 0.25 spread U.S. 5-year dollar swap 9.00 -0.50 spread U.S. 10-year dollar swap -0.75 -1.50 spread U.S. 30-year dollar swap -25.75 -1.75 spread (By Karen Pierog; Editing by Jan Harvey)