U.S. government bonds strengthened Friday following another soft inflation reading.
Continue Reading Below
In recent trading, the yield on the benchmark 10-year Treasury note was 2.296%, according to Tradeweb, compared with 2.348% Thursday. Yields fall when bond prices rise.
The consumer-price index was unchanged in June from the prior month, the Labor Department said Friday. Excluding food and energy, prices rose 0.1%.
Economists surveyed by The Wall Street Journal had expected overall prices to advance 0.1% and core prices to gain 0.2% on the month.
The lower-than-expected figures sparked buying in Treasurys. Inflation is a main threat to government bonds because it erodes the purchasing power of their fixed returns and can lead to higher interest rates from the Federal Reserve, which also hurts bond prices.
Soft inflation, as a result, tends to support bond prices.
Continue Reading Below
The data came after testimony before House and Senate panels this week from Federal Reserve Chairwoman Janet Yellen. She reiterated that Fed officials still expect inflation to rise over the coming years, justifying their plans to tighten monetary policy at a slow but steady clip. But she also said the central bank would be watching inflation data closely and could reassess their strategy if it continues to disappoint.
Investors interpreted Ms. Yellen's comments as "modestly dovish" and Friday's data "helps feed into that view," said John Canavan, market analyst at Stone and McCarthy Research Associates.
Adding to the downward pressure on yields Friday was a report from the Commerce Department that retail sales fell 0.2% in June from the prior month. That was below the 0.1% gain expected by economists.
Lackluster U.S. economic data, especially on the inflation front, has kept Treasury yields in check in recent months despite other forces pushing in the opposite direction.
Before Ms. Yellen's testimony, the momentum had been toward higher yields, driven largely by anxiety that an improving global economy may allow major central banks to scale back ultraloose monetary policies.
A big reason why bond yields climbed Thursday, some analysts and investors said, was a report from The Wall Street Journal that European Central Bank President Mario Draghi is scheduled to address the Federal Reserve's Jackson Hole conference in August.
Mr. Draghi is expected to give further signs of the ECB's growing confidence in the eurozone economy and its reduced need for monetary stimulus, the Journal reported, citing a person familiar with the matter.
Write to Sam Goldfarb at firstname.lastname@example.org
Corrections & Amplifications
This item was corrected at 4:04 p.m. ET to clarify that bond yields, not prices, climbed Thursday.
Bond yields climbed Thursday. "U.S. Treasurys Strengthen After Soft Inflation Reading," at 1026 EDT Friday, incorrectly stated bond prices climbed, in the penultimate paragraph. Prices and yields move in opposite directions. (July 14)
(END) Dow Jones Newswires
July 14, 2017 16:18 ET (20:18 GMT)