Date: 5/11/2017
Author: MarketWatch

Treasury Yields Gain on Jobless Claims and Producer-Price Data


Incapital’s Managing Director of Fixed Income Strategy Sharon Stark comments on recent economic data and its potential impact on the Fed.

 

“Today’s data gave the Fed of more evidence that labor conditions were tight, and that inflation would be nearing its 2% target. The increase in the PPI also reinforces the trend we’re seeing in consumer prices,” said Sharon Stark, fixed income strategist for Incapital.

 

The prospect of higher inflation could make the Federal Reserve comfortable with raising its short-term benchmark interest rate. Higher rates can have a corrosive effect on existing bonds as they need to be discounted to match the returns of higher-yielding new issuance.

 

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