Treasuries Steady After Selloff Ahead of GDP and Inflation Data

Treasuries pared this week’s sharp losses Thursday after inflation gauges in the US first-quarter economic growth data were unexpectedly revised lower.

The revisions rekindled expectations for at least one Federal Reserve interest-rate cut this year, which were dented on Tuesday by strong consumer confidence data and a Fed official’s comment on the potential for additional rate increases. Writing for Bloomberg Opinion, former New York Fed chief Bill Dudley said monetary policy appeared to “exerting negligible restraint on growth and inflation.”

Yields across the Treasury curve declined less than five basis points to session lows after the growth rate for core consumer prices during the first quarter was revised to 3.6% from 3.7%. They remain higher on the week as the shifting Fed outlook hurt demand for three Treasury note auctions.

“I’m not sure the Fed is doing anything wrong taking it slowly” with regard to monetary policy changes, said Kathy Jones, Charles Schwab’s chief fixed-income strategist, on Bloomberg Television. “We are seeing inflation come down. We don’t mind buying Treasuries at these levels.”