The benchmark 10-year Treasury yield edged lower on Friday as investors weighed a disappointing consumer sentiment reading that showed heightened inflation fears.
The 10-year Treasury yield declined 1.2 basis points to 4.445%, and the 2-year Treasury yield ticked up 2.6 basis point to 3.999%. One basis point is equivalent to 0.01%, and yields and prices move in opposite directions.
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WATCH HEREThe University of Michigan's survey of consumer sentiment index declined to 50.8 in May from 52.2 in April, the second-lowest reading ever behind June 2022.
A big reason for that decline was a spike in inflation expectations. Consumers now see prices rising 7.3% over the next year, up from 6.5% last month. The longer-term inflation outlook also increased to 4.6% from 4.4%. Treasury yields have had a volatile week, with the 10-year briefly spiking above 4.5% before easing below that mark.
That comes after the U.S. and China came to a trade agreement to drop most tariffs in a temporary 90-day pause earlier this week, easing fears about a global trade war and risks to the U.S. economy. However, concerns still remain as some companies have warned that rising costs will hit their businesses.
Federal Reserve Chairman Jerome Powell warned on Thursday that long-term interest rates will likely be higher, given frequent policy changes affecting the economy.
"We may be entering a period of more frequent, and potentially more persistent, supply shocks — a difficult challenge for the economy and for central banks," Powell said in prepared remarks for the Thomas Laubach Research Conference in Washington, D.C.
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