2018.04.3020:40:00UTC+00U.S. Yields Retreat as Month-end Buying Offsets Strong Inflation Data

Prices of U.S. government bonds advanced, pushing yields lower, after month-end buying countered the impact of data showing inflation has climbed to 2 percent, the Federal Reserve's two percent target.

Yield on the 10-year Treasury note yield was down 2.2 basis points to 2.936 percent, reducing the month long rally to 19.6 basis points.

The two-year note yield edged up 0.2 basis points to 2.488 percent, bringing the month long rally to 21.6 basis points. Meanwhile, the 30-year bond yield declined 2.9 basis points to 3.097 percent, reducing the month long gain to 12.2 basis points.

Analysts said the higher prices of Treasury notes may been due to the month-end buying as money managers increase their holdings of government paper to maintain the average maturity of their portfolios.

Stock market investors may have also flocked to the bond market after major equity benchmarks including the S&P 500 edged down in Monday's session to end April lower in what was a solid month for equities.

The solid demand for bonds helped offset the report that personal-consumption expenditures inflation, the Fed's preferred measure for increasing prices, reached 2 percent annually in March from a 1.7 percent year-over-year pace in February, in line with economists estimates. The figures also match the central bank's 2 percent target that would keep the central bank on its gradual path of hiking rates. Core PCE inflation advanced to 1.9 percent year-over-year, its biggest annual increase since 2012.

Stronger inflationary pressures can undermine the value of the bonds' fixed-interest payments, putting pressure on government bonds in most conditions.