Treasury yields tick up as investors digest higher inflation prints

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Bonds yields rose on Tuesday, as investors digested last week’s inflation data and look ahead to Friday’s all-important jobs report.

The yield on the benchmark 10-year Treasury note ticked up to 1.6130%, while the yield on the 30-year Treasury bond rose to 2.2924%. Yields move inversely to prices.

Inflation is even more in focus since the release of April’s core personal consumption expenditures price index last week, a key measure of inflation, which rose 3.1% — hotter than expected. Gold, which often is used as an inflation hedge, is still holding above a key level of $1,900.

ISM manufacturing new orders, prices and employment for May are due Tuesday, as well as May’s Dallas Fed Manufacturing Index. Formerly known as the Purchasing Manager’s Index (PMI), the ISM index tracks month-on-month shifts in output rates.

Looking ahead, investors are also eyeing Friday’s jobs report. Economists expect the data to show the creation of around 674,000 jobs in the month of May, after April’s read came in below expectations at 266,000.

On Tuesday, Federal Reserve Governor Lael Brainard will be delivering a speech on economic and monetary policy outlook in a webinar for the Economic Club of New York at 2 p.m. ET. Fed Vice Chair Randal Quarles will also be speaking at a virtual event for Politico on the economy and financial regulation, at 10 a.m. ET.

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Negotiations in Washington over an infrastructure spending package remain in focus, as Democrats discuss plans to ‘go it alone’ with a sweeping spending package after Senate Republicans presented a $928 billion counteroffer to President Joe Biden on Thursday, well below the White House’s latest $1.7 trillion proposal.

Transportation Secretary Pete Buttigieg said Sunday that Senate Democrats and Republicans must establish a clear direction on infrastructure by June 7.

Auctions for U.S. 3-month and 6-month Treasury bills are scheduled for Tuesday.

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