Por Gertrude Chavez-Dreyfuss
NEW YORK, Jan 28 (Reuters) – The U.S. Treasury yield curve steepened on Friday, after flattening over the past three sessions, as weaker-than-expected consumer and labor cost data eroded expectations. of a large half percentage point increase in interest rates by the Federal Reserve in March.
* A flattening of the curve reflects impending rate hikes that push short-term rates higher.
* The yield curve between 2-year and 10-year debt steepened to 65.10 basis points, the widest on the day, after hitting its narrowest spread since November 2020 the day before.
* Another yield curve measure, the spread between 5-year and 30-year yields, also widened to 53.70 basis points.
* Following the data release, fed funds futures were pricing in about 120 basis points of adjustment or almost five hikes for 2022. The chance of a 50 basis point hike in March fell to 16% from around 32%. before the economic reports.
* Friday’s reports were mixed, with some weak elements on a monthly basis, but overall, the numbers still suggest higher inflation in the near term and should keep the Fed on its tightening track.
* The return on two-year notes, reflecting rate expectations, soared to 1.228% earlier in the session, its highest since February 2020. However, after the data release, the yield eased 1 .4 basis points, to 1.1783%.
* Five-year bond yields, which are also an indicator of rate prospects, fell 2.4 basis points to 1.6389%; that of the benchmark 10-year debt was little changed, at 1.8051%; and the 30-year debt rose 1.7 basis points to 2.1082%.
(Edited in Spanish by Carlos Serrano)