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Treasury yields fall as investors assess state of U.S. economy

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Traders work on the floor of the New York Stock Exchange (NYSE) on June 01, 2023 in New York City.

U.S. Treasury yields ticked up on Monday as investors considered the outlook for the economy and monetary policy ahead of a week with few key economic data reports.

The yield on the 10-year Treasury inched down to 3.807%. The 2-year Treasury yield was last lower by less than 1 basis point to 4.749%.

Yields and prices move in opposite directions. One basis point equals 0.01%.

Investors assessed the state of the U.S. economy and considered what could be on the horizon for it, and how this could affect Federal Reserve monetary policy.

Data published last week suggested that inflationary pressures were easing, with the consumer price index rising by 0.2% compared to the previous month and 3% on a yearly basis. That marked the lowest annual level since March 2021. Both figures were slightly lower than expected by economists previously surveyed by Dow Jones.

Wholesale inflation also rose by less than anticipated, the latest producer price index report showed Thursday.  

Those data points are likely to inform the Fed's monetary policy decisions. Pressures from rising prices were a key factor in the central bank's decision to adopt a tighter monetary policy stance in early 2022. The Fed has since hiked interest rates 10 times across eleven meetings in an effort to ease inflation and cool the economy.

Interest rates were left unchanged at the most recent central bank policy meeting, but markets are broadly pricing in a further rate hike from the Fed this month. Policymakers are scheduled to meet from July 25-26.

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