October 12, 2017 / 1:17 PM / a year ago

TREASURIES-Yields rise before supply, CPI in focus

    * Treasury to sell $12 bln 30-year bonds
    * Consumer price data on Friday in focus
    * Producer prices rise in September

    By Karen Brettell
    NEW YORK, Oct 12 (Reuters) - U.S. Treasury yields rose
before the Treasury Department is due to sell new 30-year
supply, and after data showed that U.S. producer prices rose in
    The Treasury Department will sell $12 billion in 30-year
bonds on Thursday, the final sale of $56 billion in new
coupon-bearing supply this week.
    The government saw solid demand for $24 billion in
three-year notes and $20 billion in 10-year notes on Wednesday.
    The Labor Department said on Thursday its producer price
index for final demand increased 0.4 percent last month. In the
12 months through September, the PPI jumped 2.6 percent, the
biggest gain since February 2012.             
    Traders are mainly focused, however, on consumer price data
due on Friday for further indications of whether inflation is
picking up.
    “PPI was a little bit better, but that doesn’t really
translate well to CPI,” said Gennadiy Goldberg, an interest rate
strategist at TD Securities in New York. “I think for the most
part markets are still waiting for the CPI report tomorrow.”
    Benchmark 10-year notes             were last up 1/32 in
price to yield 2.341 percent, up from 2.334 percent before the
    The 10-year yields jumped to 2.402 percent on Friday, the
highest level since May 11, after the government’s employment
report for September showed a rise in wages that boosted
expectations inflation is increasing.
    Analysts, however, have said that data is muddied by recent
hurricanes. Adverse weather is seen as having impeded
lower-income workers from getting to work more than it did
higher-income workers.
    Minutes from the Federal Reserve’s September meeting
released on Wednesday showed that Fed policymakers had a
prolonged debate about the prospects of a pickup in inflation
and the path of future interest rate rises if it did not.

 (Editing by Susan Thomas)
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