Yields, which rise when bond prices fall, climbed after the Labor Department said the closely watched consumer-price index rose 0.1% in June from the prior month, while core prices rose 0.3%. Both readings were above the estimates of economists surveyed by The Wall Street Journal. Yields then took another step higher after a $16 billion auction of 30-year Treasury bonds attracted soft demand from investors.
Investors tend to sell Treasurys in response to strong inflation data because inflation erodes the purchasing power of bonds’ fixed payments.
Investors and analysts were particularly interested in Thursday’s inflation report because it came a day after Federal Reserve Chairman Jerome Powell strongly signaled that the central bank is ready to cut interest rates later this month, partly in an effort to boost inflation.