TREASURIES-Yields rise as U.S. consumer price inflation jumps

Tue Jun 17, 2014 9:07am EDT

Related Topics

* Fed policy meeting on Wednesday in focus
    * Fed to buy $0.85 bln - $1.10 bln bonds due 2036-2044

    By Karen Brettell
    NEW YORK, June 17 (Reuters) - U.S. Treasuries prices fell on
Tuesday after consumer prices recorded their largest increase in
more than a year, which may give the Federal Reserve more
confidence in adopting a hawkish tone when it meets this week.
    The Labor Department said on Tuesday its consumer price
index increased 0.4 percent last month, with food prices posting
their biggest rise since August 2011. 
    "It was less benign than expected," said Sean Murphy, a
Treasuries trader at Societe Generale in New York.
    Investors are next focused on the Federal Reserve's monetary
policy statement on Wednesday, when the U.S. central bank is
expected to announce it will continue paring its bond purchase
program and cut its growth projections.
    The timetable for when each interest member of the Federal
Open Market Committee expects policy to begin tightening, and
how quickly, will be keenly scrutinized, as will any comments
about interest rate hikes or slack in the economy from Fed Chair
Janet Yellen, who is due to speaks after the results of the
meeting are released.
    Investors have been more wary of central banks becoming more
hawkish, since Bank of England Governor Mark Carney surprised
markets last Thursday by saying that Britain could become the
first major economy to tighten monetary policy since the 2008
financial crisis. 
    Benchmark 10-year notes fell 8/32 in price to
yield 2.63 percent, up from 2.60 percent late on Monday.
Thirty-year bonds dropped 11/32 in price to yield
3.42 percent, up from 3.40 percent.
    The yield spread between five-year notes and 30-year bonds
 also flattened to 168 basis points, just above a
new five-year low of 165 basis points reached on Monday.
    The Fed will buy between $0.85 billion and $1.10 billion in
bonds due from 2036 to 2044 on Tuesday as part of its ongoing
purchases.
    

 (Editing by Clive McKeef)
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