10-year Treasury yield rises ahead of key inflation report

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The 10-year Treasury yield rose slightly early on Thursday but remained below 1.5%, with key inflation data due out later in the morning.

The yield on the benchmark 10-year Treasury note rose less than a basis point to 1.498% at 4 a.m. ET. The yield on the 30-year Treasury bond edged higher to 2.173%. Yields move inversely to prices.

The U.S. Labor Department is set to publish the May consumer price index at 8:30 a.m. ET on Thursday. Economists polled by Dow Jones expect the May CPI report to show prices up 4.7% year over year after April’s increase of 4.2%.

Investors have been concerned about whether rising inflation could see the Federal Reserve taper its asset purchases or start to talk about raising interest rates. However, the Fed has emphasized that price pressures are transitory, as the economy reopens and recovers from the coronavirus pandemic.

Georgina Taylor, fund manager at Invesco, told CNBC’s “Squawk Box Europe” on Thursday that the investment firm agreed that rising inflation was “pretty transitory.”

However, she added that it would be “remiss of us not to think through whether there are any sustainable rises in prices ahead.”

Taylor said that it was important to consider how financial markets had benefitted from a low interest rate environment, so any suggestion that central bank policymakers would have to start responding to inflationary pressures would be “quite a game-changer” for markets.

She said that Invesco had therefore started to factor that into its thinking, adding that the “balance of risk and that relationship between the equity market and the bond market, for example, is quite important to obviously build into investment decisions.”

Weekly jobless claims are also due to be released at 8:30 a.m. ET. This data is also being closely watched by investors, as the Fed has said it wants to see a fuller recovery in the labor market before it considers adjusting its monetary policy.

Auctions are due to be held Thursday for $24 billion of 30-year bonds, $40 billion of 4-week bills and $40 billion of 8-week bills.

— CNBC’s Thomas Franck contributed to this market report.

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