On Friday, Treasury bonds gained in value following the release of key U.S. inflation data, continuing the recovery that started in the previous session.
Although bond prices experienced some decline during afternoon trading after an initial surge, they maintained a positive trajectory. Consequently, the yield on the benchmark ten-year note, which inversely correlates with its price, decreased by 4.0 basis points to 4.514 percent.
This decline in the ten-year yield follows a 7.0 basis point drop on Thursday, marking a further pullback from its highest level in almost a month.
The resilience in Treasury bonds came on the heels of a report from the Commerce Department, which indicated that consumer prices in the U.S. rose in April, aligning with economists' expectations, while core consumer prices increased slightly less than anticipated.
Specifically, the Commerce Department's personal consumption expenditures (PCE) price index rose by 0.3 percent in April for the third consecutive month, consistent with economists' predictions.
Simultaneously, the core PCE price index, which excludes volatile food and energy prices, edged up by 0.2 percent in April following a 0.3 percent rise in March. Economists had forecast another 0.3 percent increase.
The annual growth rates for both the PCE price index and the core PCE price index remained unchanged from the previous month at 2.7 percent and 2.8 percent, respectively, in line with expectations.
Quincy Krosby, Chief Global Strategist for LPL Financial, commented, "An important question for the Fed that has been raised within the FOMC as well as among former Fed officials is whether the focus on reaching 2% is appropriate and if 2.5-3% is a more realistic goal." She added, "While the FOMC and Chair Powell have never suggested that monetary easing requires reaching 2%, they need to see evidence that inflation is moving closer to the target."
These inflation readings, which are reportedly favored by the Federal Reserve, were part of the Commerce Department's report on personal income and spending.
Next week, attention is likely to turn to the Labor Department's monthly jobs report, with additional focus on reports concerning manufacturing and service sector activity.
