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10-Year Treasury Yield Dips as Investors Digest Inflation Gauge, Fed Update

Source: NYSE

The 10-year U.S. Treasury yield dipped Friday after the Federal Reserve's key inflation gauge rose at its fastest clip since 1983 in December.

The yield on the benchmark 10-year Treasury note fell 2.6 basis points to 1.782% at around 4:15 p.m. ET. The yield on the 30-year Treasury bond was little changed at 2.091%. Yields move inversely to prices and 1 basis point is equal to 0.01%.

December's personal consumption expenditures index, which is the Federal Reserve's primary inflation measure, increased 4.9% from a year ago, the Commerce Department reported Friday. This was the biggest gain going back to September 1983.

The personal consumption expenditures price index excluding food and energy was slightly more than the 4.8% Dow Jones estimate. The monthly gain of 0.5% was in line with expectations.

Investors are analyzing the data closely, given that the Fed indicated after its latest policy meeting this week that it could start raising interest rates in March in an attempt to help curb inflation.

"In the week ahead, the Treasury market will continue to digest the Fed's most
recent hawkish update and ponder not only the possibility of a 50 bp hike in March but also its ramifications," BMO Capital Markets' Ian Lyngen said in a note Friday. "This backdrop leaves us biased for higher yields during the weeks preceding the March Fed meeting."

Though the 10-year yield dipped Friday, the benchmark rate has climbed so far in 2022.

—CNBC's Maggie Fitzgerald and Michael Bloom contributed to this report.

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