By Herbert Lash
NEW YORK (Reuters) – U.S. Treasuries rose on Friday on expectations that the Federal Reserve will raise interest rates again in June or July after consumer data showed inflation rose slightly on a monthly basis.
* The yield on two-year notes, which tends to be in step with the expected rate, rose 6.8 basis points to 4.579%, while the spread between two-year and 10-year notes widened further, indicating that a recession is imminent.
* Consumer spending rose 0.8% last month and revised data for March, the Commerce Department reported. The personal consumption expenditures (PCE) price index, excluding food and energy, increased 4.7% year on year, after 4.6% in the previous month.
* “The market expects hikes in the next two meetings: 13 points in June and 12 in July,” said Priya Misra of TD Securities in New York. “The cause is still split on the idea of a jump, as some H officials feel they want a little more time. So they can jump in June and come up in July.”
* Money futures rose from 52.8% to the probability that H rates will be raised at their June meeting, from 36.4% on Wednesday, according to the CME FedWatch Group tool.
* Negotiations between the White House and the Republican Congress were moderated to increase pledges to raise the US public debt ceiling over two years, which has fallen to 31.4 trillion dollars.
* Benchmark 10-year bonds were trading up 1.40 basis points, less than the two-year peer, and yielding 3.829%.
* Higher returns on shorter-term stocks imply an inversion of the yield curve, which has always meant that a recession is not far off. The spread on the yield curve was -75 basis points.
(Edited in Spanish by Carlos Serrano)