UST yields rise after US consumer spending data

NEW YORK, May 26 (Reuters) – U.S. Treasury bond yields rose on Friday amid expectations the Federal Reserve would raise interest rates again in June or July after data showing a pick-up in consumer inflation.

US personal spending rose 0.8% m/m in April, doubling the forecast.

The 2-year bond yield, which usually moves in line with interest rate expectations, rose 6.8 basis points to 4.579%.

The reversal of the U.S. government debt yield curve between two- and ten-year bonds – an indicator of economic expectations – has increased further, pointing to an impending recession.

“The market has fully priced in a rate hike in two consecutive meetings, 13bps in June and 12bps in July,” said Priya Misra of TD Securities in New York.

“The reason why opinions still differ is because of the idea that you can miss once – that is, some Fed officials think they need a little more time. Therefore, they can skip June and raise the rate in July,” the analyst explained.

The increase in yields was hampered by the efforts of the White House and Congressional Republicans in negotiations on raising the US public debt ceiling.

The approximate yield on 10-year treasury bonds increased by 1.40 bp. to 3.829%, while the 30-year government bond yield fell 1.4 basis points to 3.990%.

The original message in English is available under the code: (Herbert Lash, translated by Tomasz Kanik)