U.S. Treasury yields rose on Thursday morning after the first-quarter GDP report showed slowing growth and rising consumer prices.
The benchmark 10-year Treasury yield climbed 4.8 basis points to 4.702%, hitting its highest level since Nov. 2 of last year. The 2-year Treasury yield rose about 5.8 basis points to 4.995%, surpassing a Nov. 14 high. A basis point is equal to 0.01 percentage point.
The GDP report showed growth of 1.6%, which was lower than the 2.4% expected by economists surveyed by Dow Jones.
Along with the downbeat growth rate for the quarter, the report showed consumer prices increased at a 3.4% pace, well above the previous quarter’s 1.8% advance. This raised concern over persistent inflation and put into question whether the Federal Reserve will be able to cut rates anytime soon, even with the economy slowing.
The Fed is due to convene for its policy meeting next week. Markets are widely expecting interest rates to remain unchanged then, with traders last pricing in the first rate cut for September, according to CME Group’s FedWatch Tool.
However, investors will be closely watching for any fresh clues from policymakers about when they expect rates to be cut and how many reductions they expect to take place this year.
