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Bonds end way up on tame inflation report Decline in core producer price surprises watchers; dollar falls as another rate hike less likely. NEW YORK (CNNMoney.com) -- Treasury's ended much higher Tuesday after a key inflation report came in far lower than expected and the price of some goods, excluding food and energy, actually declined. The dollar fell against the euro and yen.
The benchmark 10-year Treasury note gained 16/32, or $5.00 for each $1,000 invested, to yield 4.94 percent, down from 5 percent late Monday. Bond prices and yields move in opposite directions. The 30-year bond jumped 31/32, or $9.69 on a $1,000 note, to yield 5.05 percent, down from 5.12 percent in the previous session. The five-year note added 10/32, yielding 4.89 percent. The two-year note rose four ticks, yielding 4.95 percent. The Producer Price Index, the measure of prices paid by businesses, rose 0.1 percent in July, down from the 0.5 percent rise in June. Economists surveyed by Briefing.com had forecast a 0.4 percent rise in the overall PPI. The so-called core PPI, which strips out often volatile food and energy prices, declined 0.3 percent. Economists had forecast the core PPI would be unchanged from the 0.2 percent rise in June. The news is good for bonds, as inflation erodes the value of the fixed interest-paying investment. But it's bad for the dollar, as it makes further interest rate hikes less likely. Higher interest rates make dollar-denominated investments more attractive. The euro bought $1.2786, up from $1.2719 late Monday. The dollar bought ¥116.13, down from ¥116.67 in the previous session. |
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