NEW YORK, Sept 12 (Reuters) – Treasury bond yields traded in a tight range on Tuesday, with the two-year note rate surpassing the 5% threshold, as investors awaited the important inflation data this week, which the market believes will prevent the Federal Reserve from raising interest rates at its next meeting.
* The consumer price index will be published on Wednesday, with underlying month-on-month inflation expectations at 0.2% in August, the same as in July, and a slowdown to 4.3% from 4.7% last month. on a 12-month basis , according to a Reuters poll.
* The change in the producer price index will be published on Thursday, along with retail sales, in data that could influence Federal Reserve policymakers when they conclude a two-day meeting on September 20.
* “I don’t think anything will happen this week in the CPI and the PPI or anything else that will get the Fed’s way,” said David Petrosinilli, senior fixed income trader at InspereX in New York.
* “We will rest on the 20th,” he said. “I hope they are done raising rates because I think they should reverse the policy immediately if they don’t.”
* The two-year bond yield, which generally reflects interest rate expectations, added 0.6 basis points to 5.001%, as futures predicted the Fed’s overnight lending rate would remain above 5% until June 2024.
* Futures also show the Fed won’t cut more than 25 basis points until the end of July next year, suggesting rates will remain higher for a longer period of time despite market expectations that the US central bank will achieve a soft landing.
* The 10-year bond yield fell 2 basis points to 4.268%, well below the 15-year high of 4.366% for the benchmark bond, set on August 22.
* The Treasury sold $35 billion in 10-year bonds at a record rate of 4.289%, in line with market expectations. On Wednesday it will auction $20 billion in 30-year bonds. Monday’s auction of $44 billion in three-year bonds was not well received by the market.
* The yield on the 30-year Treasury bond fell 2.8 basis points, to 4.349%.
* The difference between two- and 10-year bond yields, which is considered a sign of recession when shorter-term yields are higher than longer-term ones, traded at -73.5 basis points.
