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Bond Report: Bond yields drop after record-low reading of consumer sentiment

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Bond yields edged higher Friday, ahead of data that will show much inflation U.S. consumers are fearing.

What’s happening

The yield on the 2-year Treasury
TMUBMUSD02Y,
3.050%

rose 1 basis point, to 3.04%. Yields move in the opposite direction to prices.

The yield on the 10-year Treasury
TMUBMUSD10Y,
3.109%

rose 2 basis points, to 3.11%.

The yield on the 30-year Treasury
TMUBMUSD30Y,
3.218%

rose 1 basis point, to 3.22%.

What’s driving the market

The University of Michigan’s consumer sentiment index and new-home sales data are due for release at 10 a.m. Eastern.

Federal Reserve Chair Jerome Powell said the central bank took notice of the rise in inflation expectations revealed in the preliminary release of the University of Michigan survey, which he said contributed to the decision to lift interest rates by 75 basis points rather than 50 basis points this month.

Market-derived inflation expectations have dropped, due to worries the Fed will tighten so much as to trigger a recession. The yield on the 10-year TIPS dropped to 0.59% on Thursday, from as high as 0.89% last week.

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