Treasury inflation outlook rises as jump in gasoline fuels CPI

Jobless Claims

The 10-year yield will rise to 2.20% in six months, Umlauf predicted. A Bloomberg survey of forecasters predicts the rate will be 2.17% at the end of the third quarter and 2.32% at the end of the year.

First-time jobless claims unexpectedly fell by 10,000 to 332,000 last week, the fewest since mid-January, the Labor Department reported yesterday.

“Treasury yields at 2% show people expect improvement in the economy,” said Hideo Shimomura, who helps oversee the equivalent of $63.2 billion in Tokyo as chief fund investor at Mitsubishi UFJ Asset Management Co., a unit of Japan’s largest publicly-traded bank. “Inflation is still contained, but there’s a fear that it’s starting to rebound.”

Treasury securities due in a decade or more are at the cheapest level since 2011 relative to global peers with comparable maturities, according to the Bank of America indexes. Yields on Treasuries were 54 basis points higher than those in an index of other sovereign debt yesterday, the data showed. It was the most since August 2011.

The Treasury Department is scheduled to issue its monthly report on overseas holdings of U.S. assets. China was the largest foreign holder of Treasuries as of December with $1.2 trillion of the securities.

Bloomberg News

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