2023.02.2419:09:00UTC+00Treasuries Give Back Ground Following Hotter-Than-Expected Inflation Data

After moving notably higher over the two previous sessions, treasuries pulled back sharply during trading on Friday.

Bond prices regained ground going into the close of trading but remained firmly negative. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 7 basis points to 3.949 percent.

The ten-year yield largely offset the two-day pullback but closed just shy of the three-month closing high set on Tuesday.

Treasuries gave back ground following the release of a report from the Commerce Department showing an unexpected acceleration in the annual rate of growth by core consumer prices in the month of January.

The report said annual growth by core consumer prices, which exclude food and energy prices, accelerated to 4.7 percent in January from an upwardly revised 4.6 percent in December.

Economists had expected the annual rate of growth by core consumer prices to slow to 4.3 percent from the 4.4 percent originally reported for the previous month.

Including food and energy prices, consumer price growth also accelerated to 5.4 percent in January from 5.3 percent in December. The rate of growth was expected to slow to 4.9 percent.

The unexpected acceleration in core consumer price growth added to recent concerns about the outlook for interest rates.

Paul Ashworth, Chief North America Economist at Capital Economics, called the data "another sign that the Fed might have to leave its policy rate higher for longer."

Meanwhile, traders largely shrugged off separate reports showing a surge in new home sales and a slightly bigger than previously estimated improvement in consumer sentiment.

Economic data may continue to drive trading next week, with traders likely to keep an eye on reports on durable goods orders, consumer confidence and manufacturing and service sector activity.