Bond yields showed a decline on Friday as investors awaited data that could reveal a decrease in the inflation gauge favored by the Federal Reserve. This potential decline would mark the lowest rate in two years.

Yield Movements

The yield on the 2-year Treasury BX:TMUBMUSD02Y dropped by 2.5 basis points, currently standing at 5.04%. It’s important to note that yields and prices move in opposite directions.

Similarly, the yield on the 10-year Treasury BX:TMUBMUSD10Y fell by 3.5 basis points, settling at 4.54%. Additionally, the yield on the 30-year Treasury BX:TMUBMUSD30Y also declined by 2.6 basis points to reach 4.68%.

Upcoming Data Release

At 8:30 a.m. Eastern, the Commerce Department is set to report personal income data for August. This release will also include the PCE price index, which serves as the U.S. central bank’s preferred inflation gauge.

Analysts predict that the core PCE price index will have risen by 0.2% on a monthly basis, resulting in a year-over-year increase of 3.9%. Notably, this would be the lowest rate since September 2021.

Market Impact

Michael Hewson, chief market analyst at CMC Markets, suggests that today’s U.S. inflation and personal spending numbers may help moderate expectations about a November rate hike from the Federal Reserve.

In addition to the inflation data, the upcoming release of the Chicago PMI and University of Michigan consumer sentiment index is also anticipated.

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