Treasury yields rose during Wednesday Asian trading session ahead of Federal Reserve Chair Jerome Powell's testimony before Congress and as U.K. inflation came in higher than expected.
Consumer Prices Index rose 8.7% from a year ago in May, reported Bloomberg citing the Office for National Statistics. Core inflation, which excludes volatile food and energy, rose unexpectedly to 7.1% from 6.8%, it said.
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Price Action: Yield on 2-year Treasuries rose as high as 4.74% compared to the lows of 4.66% seen on Tuesday, before cooling off a bit. Similarly, yield on 10-year notes rose to 3.76% against the lows of 3.7% seen the day before.
"We will not hesitate in our resolve to support the Bank of England as it seeks to squeeze inflation out of our economy, while also providing targeted support with the cost of living," Chancellor of the Exchequer Jeremy Hunt said in a statement, according to the report. "We know how much high inflation hurts families and businesses across the country, and our plan to halve the rate this year is the best way we can keep costs and interest rates down."
The latest inflation figures come a day prior to the BOE's latest policy decision. Economists and investors are anticipating another 25 basis points increase in its key lending rate to 4.75%, the Bloomberg report said.
Earlier this week, bond markets across the world witnessed a decline as investors and traders began weighing-in the possibility of rate hikes continuing for longer than expected. The iShares 1-3 Year Treasury Bond ETF SHY gained 0.037% on Tuesday while the Vanguard Short-Term Treasury Index Fund ETF VGSH rose 0.069%.
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