WASHINGTON (dpa-AFX) - Treasuries moved sharply lower during trading on Wednesday as investor reacted to hotter than expected consumer price inflation data.
Bond prices showed a significant move to the downside early in the session and remained firmly negative throughout the day. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 10.0 basis points to 4.637 percent.
The sell-off by treasuries came following the release of a closely watched Labor Department report showing consumer prices in the U.S. increased by more than expected in the month of January.
The Labor Department said its consumer price index advanced by 0.5 percent in January after climbing by 0.4 percent in December. Economists had expected consumer prices to rise by 0.3 percent.
The report also said the annual rate of consumer price growth accelerated to 3.0 percent in January from 2.9 percent in December, while economists had expected the pace of growth to remain unchanged.
The bigger than expected monthly increase by consumer prices partly reflected a continued surge by energy prices, which shot up by 1.1 percent in January after spiking by 2.4 percent in December.
Excluding the jump by energy prices as well as a 0.4 percent increase by food prices, core consumer prices rose by 0.4 percent in January after inching up by 0.2 percent in December. Core prices were expected to increase by 0.3 percent.
The annual rate of core consumer price growth also ticked up to 3.3 percent in January from 3.2 percent in December. Economists had expected the pace of growth to slow to 3.1 percent.
The hotter than expected inflation data has increased speculation the Federal Reserve will leave interest rates on hold for a prolonged period.
Fed Chair Jerome Powell noted during his congressional testimony on Tuesday that the central bank can 'maintain policy restraint for longer' if inflation does not continue to move sustainably toward 2 percent.
'Today's data reaffirms Powell's decision to put rate cuts on the back burner for an extended period of time,' said Charlie Ripley, Senior Investment Strategist for Allianz Investment Management.
He added, 'Overall, today's inflation data should force market participants to re-think the Fed's ability to cut rates this year, especially considering the rise in prices is likely unrelated to any tariff activity from the White House.'
Trading on Thursday may be impacted by reaction to the latest U.S. economic data, including reports on weekly jobless claims and producer price inflation.
Copyright(c) 2025 RTTNews.com. All Rights Reserved
Copyright RTT News/dpa-AFX
© 2025 AFX News
