Yields on U.S. Treasurys Stabilize Amid Slowing Inflation

The latest data shows that inflation in the U.S. continued to slow in November, bringing it closer to the Federal Reserve's target. As a result, yields on U.S. Treasurys were largely unchanged or slightly lower this morning in a shortened trading session ahead of Christmas.

Yield Movement

• The yield on the 2-year Treasury note (BX:TMUBMUSD02Y) was at 4.344%, a slight decrease from 4.349% at 3 p.m. Eastern on Thursday. This marks the lowest finish since June 1.
• The 10-year Treasury note (BX:TMUBMUSD10Y) yielded 3.872%, down from 3.893% on Thursday afternoon.
• The 30-year Treasury bond yield (BX:TMUBMUSD30Y) slipped to 4.009%, down from 4.034% late Thursday.

Inflation Trends

Following the release of the government's report, Treasury yields initially rose. The personal-consumption expenditures (PCE) index showed a 0.1% decline in November, with year-over-year inflation slowing to 2.6% from 2.9% in October, the lowest since February 2021.

The core PCE rate, which excludes food and energy, increased by 0.1% in November. This growth was lower than the 0.1% increase predicted by economists. Over the past 12 months, the core rate decelerated to 3.2% from 3.4% in the previous month. This marks the smallest increase since early 2021.

Durable Goods Orders Rebound

In other economic news, the government reported that orders for durable goods rebounded by 5.4% in November. This marks the largest gain since July 2020.

Trading Session and Market Holiday

U.S. bond traders will have a shortened session, with a 2 p.m. close, while U.S. equity markets will have a full day of trading. Financial markets will be closed on Monday in observance of Christmas Day.

Expert Opinions

"It was a softer inflation print to be sure, although we’ll argue the market was biased for a downside surprise which has translated to a somewhat counterintuitive price response" initially, noted Benjamin Jeffery, rates strategist at BMO Capital Markets, in a note.