Yahoo Finance 
TREASURIES-U.S. yields up on inflation, 2-year highest since 2008 crisis
* Consumer price inflation highest in 11 months
* Two-year yields hit highest since 2008
* U.S. retail sales rose in December, November's revised
higher
By Kate Duguid
NEW YORK, Jan 12 (Reuters) - Treasury yields climbed on
Friday as underlying U.S. consumer prices rose the most in 11
months in December, bolstering expectations of a pickup in
domestic inflation and Federal Reserve interest rate hikes this
year.
The two-year yield, which is sensitive to
traders' views on interest rates, rose to more than 2 percent
for the first time since the financial crisis.
"This probably does heighten the chances of, at least
incrementally, a move in March at the first meeting Powell will
chair," said Lou Brien, market strategist at DRW Trading in
Chicago, referring to incoming Federal Reserve Chair Jerome
Powell.
The U.S. Senate Banking Committee will hold a second vote on
Jan. 17 on President Donald Trump's nomination of Powell to lead
the central bank.
The U.S. Labor Department said its Consumer Price Index,
excluding the volatile food and energy components, rose 0.3
percent last month, amid strong gains in the cost of rental
accommodations and healthcare.
In the past year, inflation has remained stubbornly lower
than the Fed's target rate of 2 percent, despite strong gross
domestic product growth and employment data.
In a separate report on Friday, the U.S. Commerce Department
said retail sales rose in December and it revised sales growth
in November higher, suggesting the economy exited 2017 with
strong momentum.
Euro zone bond yields were lower at midday on Friday, with
German yields pulling back from five-month peaks after the
European Central Bank's Jens Weidmann played down the risk of an
imminent rate hike. The yield of U.S. benchmark bonds fell in
step with Europe, but remained above Thursday's close.
In U.S. government news, Treasury Secretary Steven Mnuchin
said on Friday he believed the Republican tax cuts will
ultimately become revenue neutral over 10 years because of
higher growth but that the Treasury will likely ask Congress for
more money to implement the tax plan.
Next (Frankfurt: 779551 - news) week's schedule for data releases is light, so the
market will likely focus on Washington. As the continuing
resolution expires Friday, investors will be watching Congress
to see if it can put together a funding bill in time to avoid a
government shutdown.
At 2:13 p.m. (1913 GMT), the yield on 10-year government
notes was 2.554 percent, up from 2.531 percent at
Thursday's close. The yield on two-year government bills hit a
high of 2.026 percent, its highest since September 2008, before
falling slightly to 2.002 percent at 2:13 p.m. EST.
Friday, Jan. 12 at 1434 EST (1934 GMT):
Price
US T BONDS MAR8 150-12/32 -0-2/32
10YR TNotes MAR8 122-236/256 -0-52/256
Price Current Net
Yield Change
(pct) (bps)
Three-month bills 1.42 1.4446 0.008
Six-month bills 1.5675 1.6016 0.013
Two-year note 99-194/256 2.0017 0.029
Three-year note 99-170/256 2.1162 0.030
Five-year note 98-246/256 2.3482 0.034
Seven-year note 98-136/256 2.4811 0.027
10-year note 97-96/256 2.5535 0.023
30-year bond 97-204/256 2.8602 -0.003
DOLLAR SWAP SPREADS
Last (bps) Net (LSE: 0LN0.L - news)
Change
(bps)
U.S. 2-year dollar swap 19.00 0.50
spread
U.S. 3-year dollar swap 18.00 1.00
spread
U.S. 5-year dollar swap 4.50 0.25
spread
U.S. 10-year dollar swap -1.00 0.25
spread
U.S. 30-year dollar swap -19.75 1.25
spread
