Por Gertrude Chavez-Dreyfuss
NEW YORK, Apr 9 (Reuters) – U.S. Treasury yields rose on Friday after better-than-expected producer price data for March that showed a rebound in inflation, in line with others suggesting that the world’s largest economy is on the way to recover from the pandemic.
* US yields overall hit session highs after PPI figures.
* Data on Friday showed US producer prices rose more than expected in March, marking the biggest annual rise in nine and a half years and in line with expectations of higher inflation as the economy reopens.
* “Yields are higher right now due to higher inflation expectations than where we were before,” said Lou Brien, market strategist at DRW Trading, but noted that yields are down from their highs.
* “I think the market is willing to give the Federal Reserve a little benefit of the doubt, which said the first wave of inflation would be transitory,” Brien said.
* At an International Monetary Fund event on Thursday, Fed Chief Jerome Powell said that increased spending as the US economy reopens, along with supply bottlenecks, will likely push prices. up this year, but not the kind of annual price increases that would constitute inflation.
* By mid-morning, the 10-year Treasury yield rose to 1.632%.
* 20-year yields challenged Friday’s trend with a drop to 2.213% from 2.224% in the previous round.
* Meanwhile, 30-year returns rose to 2.33% from 2.322% on Thursday, while those on five-year papers, which normally reflect interest rate expectations, rose for the first time in five days to 0.875% from 0.84% in the previous day.
* The yield curve, which has become a barometer of risk in the bond market, steepened on Friday following the data. The spread between US 2- and 10-year yields rose to 149.10 basis points.
(Reporting by Gertrude Chavez-Dreyfuss; Edited in Spanish by Javier López de Lérida)