NEW YORK- US Treasury yields slid on Wednesday as data showed the world’s largest economy grew in the fourth quarter, while investors awaited key inflation data that could provide new insight into when the Federal Reserve starts cutting interest rates.
Gross domestic product increased at a 3.2 percent annualized rate, a revision slightly lower from the previously reported 3.3 percent pace, the Commerce Department’s Bureau of Economic Analysis said in its second estimate of fourth-quarter GDP growth. Economists polled by Reuters had expected GDP growth would remain unrevised.
In afternoon trading, the US two-year yield, which reflects interest rate expectations, fell 6.2 basis points (bps) to 4.649 percent , while the yield on the benchmark 10-year note slid 3.5 bps to 4.404 percent .
The initial reaction to the US GDP data pushed yields lower due to month-end buying, said Tom di Galoma, managing director and co-head of global rates trading at BTIG.
The market is worried overall that the personal consumption expenditures (PCE) price index, which will be released on Thursday, may come in hotter than expected, echoing the release of the consumer price index (CPI) two weeks ago.