Market Watch Bond Report...Expectations left in place for the first interest-rate cut to arrive in September.

 Bond Report

2-year Treasury yield ends at more than 5-month low after PCE inflation data

By Vivien Lou Chen

Last Updated: July 26, 2024 at 3:49 p.m. ET
First Published: July 26, 2024 at 5:42 a.m. ET

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U.S. government debt rallied on Friday, pushing yields broadly lower, after the Federal Reserve’s preferred inflation gauge left expectations in place for the first interest-rate cut to arrive in September.

What happened

• The yield on the 2-year Treasury BX:TMUBMUSD02Y fell 5.4 basis points to 4.388%, from 4.442% on Thursday. Friday’s level is the lowest since Feb. 2, based on 3 p.m. Eastern time figures from Dow Jones Market Data. For the week, the 2-year yield declined 11.9 basis points.
• The yield on the 10-year Treasury BX:TMUBMUSD10Y dropped 5.7 basis points to 4.199%, from almost 4.26% on Thursday. Friday’s closing level is the lowest since July 18. For the week, the 10-year yield declined 3.9 basis points.
• The yield on the 30-year Treasury BX:TMUBMUSD30Y fell 4.4 basis points to 4.456%, from 4.5% on Thursday. However, the 30-year rate rose by less than 1 basis point for the week.

What drove markets

In data released on Friday, prices based on the Fed’s preferred inflation measure rose slightly in June. The personal-consumption expenditures price index edged up 0.1% last month, matching the median estimate of economists polled by the Wall Street Journal. The increase in inflation in the past 12 months slipped to 2.5%, from 2.6%.

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