US Treasuries fall as investors await inflation data

US Treasury bonds declined on Monday, following weakness in European bond markets, as investors prepared for important inflation reports scheduled for release this week.

The benchmark 10-year Treasury yield increased 3.6 basis points to 4.694% in late morning trading. The 30-year bond yield rose 3.0 basis points to 5.240%. Bond prices move inversely to yields.

The 2-year Treasury yield, which reflects market expectations for Federal Reserve interest rate decisions, climbed 3.3 basis points to 4.237%.

The decline reversed some of Friday’s gains, which occurred after US nonfarm payrolls data came in weaker than expected. Traders adjusted their positions by re-establishing short positions and reducing long exposure.

Tom di Galoma, managing director for global rates trading at Mischler Financial, said markets are waiting for the consumer price index and producer price index data. He noted that recent inflation numbers were not disinflationary and could exceed market forecasts.

The consumer price index is expected to rise 0.1% in July from a 0.4% decline in June. The year-over-year figure is forecast at 3.4%, down from 3.5% the previous month. Core CPI is expected to rise 0.1%, while the year-over-year number is projected at 2.5%.

The headline producer price index is forecast to increase 0.2% in July after declining 0.3% previously. The year-over-year PPI is expected to rise 4.9% after advancing 5.5% in June.

Oil prices rose amid ongoing geopolitical tensions in the Middle East.