(Bloomberg) -- Treasuries are on track for their worst week in six months as investors brace for a slate of US inflation and sentiment data.
US 10-year yields edged up to 4.12%, taking them 10 basis points higher on the week, the most since June. Yields have failed to sustain a late-November break below 4% given some Federal Reserve policymakers remain cautious on further easing due to inflationary fears. The 30-year yield climbed to 4.78%, the highest since September.
That's put Friday's US Personal Consumer Expenditure data into focus. While the headline number for September is expected to pick up to 2.8% from the previous year, the core PCE reading — the Fed's preferred measure of inflation — is forecast to have slowed to 2.8%, according to a Bloomberg poll of economists.
A softer reading would signal that underlying inflation is continuing to drift toward the Fed's 2% target, bolstering bets for further interest-rate cuts.
Wednesday's Fed outcome is looming large, with traders overall still betting on a third consecutive quarter-point rate reduction. In addition, the Treasury will sell almost $120 billion of three-, 10- and 30-year debt next week.
"Markets are probably looking ahead to the bond auctions and waiting for the December FOMC to hint at future direction," said Evelyne Gomez-Liechti, a strategist at Mizuho International Plc.
The bulk of this week's move in yields came on Monday, fueled by a deluge of corporate debt sales and a warning of potential rate hikes from Bank of Japan Governor Kazuo Ueda. Any signal that the BOJ might tighten policy can ripple across global bond markets, pushing yields higher elsewhere. Short-end Japanese bonds led losses on Friday.
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