2-, 10-year yields extend gains from one-week highs after July producer-price index readings

Treasury yields jumped Friday morning after the July producer price index came in higher than expected.

What’s happening

• The yield on the 2-year Treasury
  BX:TMUBMUSD02Y
  was 4.893%, up 7.2 basis points from 4.821% on Thursday.

• The yield on the 10-year Treasury
  BX:TMUBMUSD10Y
  was 4.141%, up 6 basis points from 4.081% Thursday afternoon.

• Thursday’s levels for the 2- and 10-year rates were the highest since Aug. 3, based on 3 p.m. figures from Dow Jones Market Data.

• The yield on the 30-year Treasury
  BX:TMUBMUSD30Y
  was 4.273%, up 3.3 basis points from 4.24% late Thursday.

What’s driving markets

Data released on Friday showed that the producer price index rose 0.3% in July, more than the 0.2% advance expected by economists polled by The Wall Street Journal. July’s increase is the largest gain since January and up from a revised flat reading in June.

The PPI data comes just a day after July’s consumer price index showed underlying core inflation easing over the past 12 months to 4.7% from 4.8% previously, in line with expectations.

However, yields moved higher anyway on Thursday following a weaker-than-expected auction of 30-year bonds and comments by San Francisco Fed President Mary Daly, who said the central bank has more work to do to get inflation back down.