BOND REPORT: 2-year Treasury Yield Ends Above 2%, Highest Since 2008

Core inflation gauge rises more than expected in December

Treasurys weakened Friday, pushing the two-year yield above 2%, after a larger-than-expected rise in a key consumer-price measure underlined rising inflation expectations and dampened appetite for U.S. government paper.

What did Treasurys do?

The yield on the 2-year note, sensitive to changes in monetary policy expectations, rose 2.9 basis points to 2.001%, its highest finish since September. 2008. That contributed to a 4.1 basis point climb this week.

The yield for the 10-year benchmark note rose 2 basis points to 2.551%, extending a 7.5 basis point weeklong rise. While, the 30-year bond yield slipped 0.9 basis point to 2.855%, but saw a 4.3 basis points rise for the week.

Bond prices move inversely to yields.

What’s driving the market?

Treasury yields popped higher after core consumer prices rose 0.3% (http://www.marketwatch.com/story/gimme-shelter-cpi-rises-01-in-december-mostly-on-higher-housing-costs-2018-01-12), compared with the 0.2% gain forecast by economists surveyed by MarketWatch. Stronger price pressures can erode the value of long-dated debt, paring demand for U.S. government…

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