Treasurys dip on inflation report
Bond prices ease after the Labor Department says wholesale inflation jumped in March.
NEW YORK (CNNMoney.com) -- Bond prices slid Tuesday after a government report showed wholesale inflation spiked dramatically in March due to rapidly rising energy and food costs.
The Labor Department's Producer Price index (PPI) jumped 1.1% last month, topping forecasts for a rise of 0.6%. PPI rose 0.3% in the previous month.
Meanwhile, the so-called "core" PPI, which excludes volatile food and energy prices, rose 0.2%, in line with estimates. Core PPI rose 0.5% last month.
"Bond prices slid in the face of some horrendous inflation data," said Bill Larkin, a portfolio manager at Cabot Money Management. "But the good news is that we have had some strong foreign buying interest and the lackluster performance in stocks are keeping yields high," he added.
Elsewhere, oil prices settled at a new record high above $113 a barrel as the dollar fell against the euro.
The benchmark 10-year Treasury note fell 23/32 to 99 5/32 and yielded 3.60%, up from 3.51% late Monday. Prices and yields tend to move in opposite directions.
The 30-year long bond fell 1 16/32 to 98 29/32 and yielded 4.44%, up from 4.35% late Monday.
The 2-year note fell 6/32 to 99 25/32 with a yield of 1.86%, up from 1.75%.
Larkin thinks Tuesday's inflation report may cause the Federal Reserve to be less aggressive in its rate-cutting policy. But he added that he expects the central bank to continue to make maintaining economic stability its first priority and managing inflation its second. 
