Bonds remain lower after Fed minutes, CPI

NEW YORK (CNNMoney.com) -- Treasury prices pared early losses Wednesday afternoon but remained lower following the release of the minutes from the Federal Reserve's most recent meeting and a bigger than expected jump in consumer prices.

The dollar gained against the euro and the yen.

The benchmark 10-year note lost 3/32, or 94 cents for every $1,000 invested, to yield 4.69 percent, up from 4.68 percent late Tuesday.

The 30-year bond fell 6/32, or $1.87 on a $1,000 bond, to yield 4.79 percent, up from 4.78 in the previous session. Bond prices and yields move in opposite directions.

The five-year note slipped 2/32 to yield 4.68 percent, while the two-year note lost one tick, yielding 4.84 percent.

Bond prices pared early losses following the release of the minutes from the Fed's Jan. 30-31 policy meeting, in which policymakers warned that the economy is moderating and that inflation remains a concern even though it appeared to be easing.

The Federal Reserve left interest rates unchanged at 5.25 percent at its most recent policy meeting. This was the fifth time in a row the central bank has held interest rates steady.

Bonds slipped earlier in the session after the government reported that the Consumer Price Index (CPI), a key inflation gauge, came in higher than expected in January.

The core CPI reading, which excludes volatile energy and food prices, rose 0.3 percent in January, also topping forecasts.

"The CPI report was an obvious disappointment, not only for the marketplace, but to the Fed," William Sullivan, chief economist at JVB Financial Group, told Reuters. "It was a clear reminder that the Fed is unlikely to cut the fed funds target anytime soon."

In related news, St. Louis Federal Reserve Bank President William Poole and San Francisco Federal Reserve Bank President Janet Yellen delivered separate remarks Wednesday, saying that interest rates were well positioned for inflation pressures to move lower.

In currency trading, the euro bought $1.3133, down from 1.3138 late Tuesday. The dollar bought ¥120.89, up from ¥120.00 in the previous session.

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