By Gertrude Chavez-Dreyfuss
NEW YORK (Reuters) – US Treasury yields were uneven and in a tight range on Friday, as the market generally overlooked the rise in year-on-year core inflation above the Federal Reserve’s target.
* The bond market will close early in the day, ahead of the Remembrance Day long weekend.
* A report released on Friday showed that core inflation in the 12 months through April, as measured by the Personal Consumption Expenditure (PCE) price index, excluding the volatile food and energy components, it accelerated 3.1%, well above the Fed’s target of 2%.
* However, on a monthly basis, the underlying PCE improved 0.7% in April after gaining 0.4% in March. Wall Street economists expected a 0.6% rise on this measure.
* “I think the most important part of the economic data is that it confirmed that the upward pressure on core inflation seen during the month of April is still within the range of expectations,” said Ian Lyngen of BMO Capital in New York.
* “That being said, the underlying PCE’s year-on-year reading is the highest since 1992, but the fact that the bond markets seem to be taking all of this philosophically suggests that investors continue to believe the Fed that this is a temporary influence and therefore does not deserve a repricing at a higher rate level, “he added.
* In mid-morning trading, the 10-year bond yield was little changed at 1.613%, from 1.61% the day before.
* The return on 30-year papers was down slightly to 2.285% from 2.29% on Thursday.
(Additional reporting by Karen Brettell; edited in Spanish by Carlos Serrano)