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Improved inflation halted treasury yields slide

Improved inflation statistics released on Friday last week seems to have put a temporary halt in yields slide.

  • US consumer price index rose 0.2% in March on monthly basis, however dropped -0.1% on a yearly basis. However core consumer prices excluding the volatile components like food and energy rose at faster pace of 1.8% y/y in March, better than previous and expected at 1.7%. CPI core was positive 0.2% m/m.

US treasury yields which has been dropping this month after FOMC's push last month followed by weak job report. 2 year yields dropped from 0.73% in Mid-March pre FOMC.

  • Friday US 2 year yield dropped 0.468, close to the lowest level since February. 5 year yield dropped to 1.265 from 1.70 in March. However Friday 2 year finally closed at 0.50% and as of today trading close to 0.52%.

However it is too early to say that yields have curved bottom for now along with dollar, both remain pretty vulnerable to weak economic dockets.

Dollar index is trading at 97.4, flat for the day so far.

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