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| Economists see a less aggressive Fed
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The big jump in third-quarter productivity lessens the need for too many more rate hikes.(Full story.)
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NEW YORK (CNNMoney.com) -
Treasury prices rose and yields fell Wednesday after the government said the economy grew at a faster pace in the third quarter than previously estimated but that inflation was still tame.
The benchmark 10-year note added 5/32 of a point to 100-9/32 to yield 4.46 percent, down from 4.48 late Tuesday. The 30-year bond rose 9/32 of a point to 110-9/32 to yield 4.67 percent, down from 4.68 in the previous session. Bond prices and yields move in opposite directions.
In shorter-dated debt, the two-year note was unchanged, yielding 4.38 percent, while the five-year note gained two ticks, also yielding 4.38 percent.
Bonds gained after the government revised gross domestic product, a broad measure of the nation's economic activity, to 4.3 percent for the third quarter from an original estimate of 3.8 percent.
Economists surveyed by Briefing.com had expected the measure of economic growth to be revised to 4 percent in the period. (Full story.)
Economic growth was stronger than expected, but the report also said inflation was lower than initially reported. Bonds hate inflation, which erodes the value of the fixed-interest paying investments.
The price index for consumer spending, excluding food and energy, one of the more closely watched inflation readings, fell to a 1.2 percent rate.
Treasuries, which slumped Tuesday on strong housing data and consumer confidence numbers, increased on signs that inflation isn't rising in tandem with the expanding economy.
The encouraging inflation reading could also give the Fed a reason to ease up on its measured pace of rate hikes. The Fed has raised its key rate 12 straight times since last June in an effort to ward off inflation.
In currency trading, the dollar gained.
The euro bought $1.1764, down from $1.185 late Tuesday. The dollar bought ¥119.60, up slightly from ¥119.55 in the previous session.
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For updated bond charts, click here.
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