investors react to hot wholesale inflation
U.S. Treasury yields fell on Friday as investors reacted to a stronger-than-expected January wholesale inflation report and a decline in the stock market amid growing fears that artificial intelligence will hurt the economy.
The benchmark 10-year Treasury yield decreased by more than 5 basis points to 3.962%, and the 30-year Treasury bond yield decreased by more than 3 basis points to 4.631%. The 2-year Treasury note yield fell more than 5 basis points to 3.389%.
One basis point equals 0.01%, and yields and prices move in opposite directions.
Latest data on the economy showed that core wholesale prices, excluding food and energy, rose 0.8% in January, according to the Bureau of Labor Statistics; This was well above the 0.3% increase expected by economists surveyed by Dow Jones.
The headline reading, which includes all price components, rose 0.5% last month, according to the Dow Jones consensus estimate; this was again above the expected 0.3% increase.
“Markets didn’t need the bad inflation news this morning and stocks continued their losses,” said Chris Rupkey, chief economist at FWDBONDS. “Bond yields have fallen below the psychological 4.00% level ahead of the producer prices report, and you can bet your bottom dollar that bond yields won’t move above this key level anytime soon.”
Growing fears that AI will lead to massive job losses and eventually contribute to economic stagflation, with rising prices coupled with slowing economic growth, are also hurting economic sentiment.
Dow Jones Industrial Average The decline of more than 500 points (1.1 percent) encouraged some investors to turn to bonds for safety, ultimately driving down yields.
As the potential for AI disruption puts increasing pressure on investors this year, software stocks have been hammered by concerns that agency AI will make legacy companies obsolete. iShares Extended Technology-Software Sector ETF (IGV) It’s down almost 10% this month alone and is almost 31% below its recent high.
Investors fear layoffs, especially in the industry To obstruct It said Thursday it would lay off more than 4,000 employees, roughly half its workforce.
Other factors disturbing the markets are President Trump’s uncertain tariff policies and military tensions between the USA and Iran. On Friday, Trump said he would prefer not to attack Iran but sometimes had to.
— CNBC’s Pia Singh contributed to this report
