U.S. Treasury yields rose on Friday morning after Federal Reserve Chairman Jerome Powell acknowledged in a Senate testimony that inflation was “well above target.”
The yield on the benchmark 10-year Treasury note rose 3 basis points to 1.329% at 5:30 a.m. ET. The yield on the 30-year Treasury bond climbed 3.9 basis points to 1.958%. Yields move inversely to prices.
Powell was grilled by senators on Thursday during his second congressional testimony of the week on monetary policy.
While Powell reiterated the view that higher inflation looked to be transitory, he also acknowledged that price pressures were well above the central bank’s target.
Inflation and employment growth are both determining factors as to when the Fed will tighten its easy monetary policy.
“We’ve said that we would begin to reduce our asset purchases when we feel that the economy has achieved substantial further progress measured from last December,” Powell said Thursday. “We’re in active consideration of that now.”
Treasury Secretary Janet Yellen told CNBC’s “Closing Bell” on Thursday that she believed there would be “several months more of rapid inflation” before price pressures cool off.
“I’m not saying that this is a one-month phenomenon. But I think over the medium term, we’ll see inflation decline back toward normal levels,” she said. “But, of course, we have to keep a careful eye on it.”
In terms of data out on Friday, June retail sales figures are due to be released at 8:30 a.m. ET.
The University of Michigan is also set to release its preliminary July data on consumer sentiment and inflation expectations at 10 a.m. ET.
There are no auctions due to be held on Friday.
— CNBC’s Thomas Franck and Jeff Cox contributed to this market report.
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