NEW YORK — US Treasury yields were modestly higher on Friday, coming off session peaks, after data showed consumer spending declined unexpectedly in May even as inflation remained tepid, as markets started pricing in a quicker pace of Federal Reserve easing this year.
The inflation outlook as indicated in the University of Michigan survey also fell from May levels, suggesting that the Fed could be a lot closer in resuming rate cuts than people expect.
US 10-year yields were last up 3.2 basis points (bps) at 4.284 percent, after earlier hitting a roughly two-week high. On the week, the 10-year yield was down 8.6 bps, falling for a third straight week.
US 30-year yields rose 3.5 bps to 4.851 percent. They were down 3.7 bps for the week, also sliding for three straight weeks.
US two-year yields advanced 2.9 bps to 3.744 percent, but down more 16.4 bps on the week. Its weekly fall was the most since mid-April.
Friday’s data showed US consumer spending unexpectedly fell in May, dipping 0.1 percent last month after an unrevised 0.2 percent gain in April, as the boost from the pre-emptive buying of goods like motor vehicles ahead of tariffs eased. According to Action Economics, this is the first decline in spending since September 2021.
US personal income also fell 0.4 percent last month.
