After an initial move to the downside, treasuries showed a lack of direction over the course of the trading day on Wednesday before closing roughly flat.
Bond prices spent much of the session lingering near the unchanged line. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, finished the day down just 1 basis point at 3.412 percent.
The slight decrease came after the ten-year yield climbed to a three-month closing high in the previous session.
The choppy trading on the day came as traders continued to digest yesterday’s hotter-than-expected consumer price inflation data.
The data has led to worries the Federal Reserve could decided to raise interest by 100 basis points at next week’s monetary policy meeting.
CME Group’s FedWatch Tool is currently indicating a 72.0 percent chance of a 75 basis point rate hike and a 28.0 percent chance of a 100 basis point rate hike.
Partly offsetting the inflation worries, the Labor Department released a separate report this morning showing a modest decrease in U.S. producer prices in the month of August.
The Labor Department said its producer price index for final demand edged down by 0.1 percent in August after falling by a revised 0.4 percent in July.
Economists had expected producer prices to dip by 0.1 percent compared to the 0.5 percent drop originally reported for the previous month.
The report also showed the annual rate of growth in producer prices slowed to 8.7 percent in August from 9.8 percent in July, roughly in line with estimates.
Nonetheless, traders may have been reluctant to make significant moves ahead of the release of a slew of U.S. economic data on Thursday, including reports on weekly jobless claims, retail sales and industrial production.
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