Treasuries Move Higher Following Tamer-Than-Expected Inflation Data

(RTTNews) - Treasuries moved to the upside during trading on Thursday, more than offsetting the slight decrease seen in the previous session.

Bond prices advanced early in the session and remained firmly positive throughout the day. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell 3.5 basis points to 4.116 percent.

With the decrease, the ten-year yield closed lower for the third time in the last four sessions, dropping to a two-week closing low.

The strength among treasuries came following the release of a closely watched Labor Department unexpectedly showing a slowdown in the annual rate of consumer price growth.

The Labor Department said consumer prices in November were up by 2.7 percent compared to the same month a year ago.

The year-over-year price growth in November reflects a notable slowdown from the 3.0 percent surge in September. Economists had expected the annual rate of growth to tick up to 3.1 percent.

The annual rate of growth by core consumer prices, which exclude food and energy prices, also slowed to 2.6 percent in November from 3.0 percent in September. The pace of core price growth was expected to remain unchanged.

The tamer-than-expected inflation data has led to renewed confidence the Federal Reserve will continue cutting interest rates next year.

"It always sounds smarter to predict trouble ahead, but this morning's inflation data was much better than expected," said Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management.

He added, "Of course, it's only one month's data points and they will likely fluctuate in the upcoming months, but the main concern of Fed officials who are reluctant to keep cutting is that inflation is persistently high and won't come down if they keep lowering interest rates, and at this point that doesn't look like it's the case."

A separate report released by the Labor Department showed first-time claims for U.S. unemployment benefits declined roughly in line with economist estimates in the week ended December 13th.

The Labor Department said initial jobless claims fell to 224,000, a decrease of 13,000 from the previous week's revised level of 237,000.

Economists had expected jobless claims to slip to 225,000 from the 236,000 originally reported for the previous week.