U.S. Treasury yields retreated on Friday after the Federal Reserve's preferred inflation data came in mostly in line with economist expectations.
The benchmark 10-year Treasury yield fell more than 5 basis points to 4.501% after dipping below the key 4.5% level earlier in the day. The 2-year Treasury yield was also down by more than 5 basis points at 4.877%.
Yields and prices have an inverted relationship. One basis point equal 0.01%.
The core reading for the personal consumption expenditures price index, which excludes food and energy costs, rose 0.2% in April. That matched estimates from economists surveyed by Dow Jones.
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Core PCE was up 2.8% on a yearly basis, which was 0.1 percentage point above the forecast.
PCE was up 0.3% for the month and 2.7% year over year when including food and energy prices.
The PCE release comes after another key inflation measure, the consumer price index, came in at 3.4% for April on an annual basis. Core CPI increased 3.6% on a 12-month basis.
Money Report
Inflation has proven stickier than previously thought this year, pushing back expectations for when interest rates may be cut. CME Group's FedWatch tool last showed that traders were not pricing in rate cuts for the Fed's June or July meeting, and chances of a cut in September were at around 50%.
The next Fed policy meeting is scheduled for June 11-12. Fed officials have repeatedly indicated that they are looking for more data evidence that inflation is easing before moving to cut rates, and that patience would be required.
