Investors worry food and fuel costs may keep surging, regardless of how aggressively the Fed moves, partly because of the crisis in Ukraine, which is a major breadbasket for the world.
Another report Friday showed consumer sentiment worsening more than economists expected. Much of the souring in the University of Michigan’s preliminary reading was due to higher gasoline prices.
On Saturday, the national average for a gallon of regular gas surpassed $5, by a fraction of a penny, according to the AAA auto club.
That adds to several recent profit warnings from retailers indicating U.S. shoppers are slowing or at least changing their spending because of inflation. Such spending is the heart of the U.S. economy.
The two-year Treasury yield zoomed to 3.05% following the inflation report from 2.83% late Thursday, a big move for the bond market.
The 10-year yield was also up, but not quite as dramatically as the two-year yield. It rose to 3.19% as of early Monday, up from 3.15% Friday and 3.04% on Thursday. That’s its highest level since 2018.
The narrowing gap between those two yields is a signal that investors in the bond market are more concerned about economic growth. Usually, the gap is wide, with 10-year yields higher because they require investors lock away their dollars for longer.
A two-year yield higher than the 10-year yield would be a signal to some investors that a recession may hit in a year or two.
In other trading, benchmark U.S. crude oil lost $2.11 to $118.56 per barrel in electronic trading on the New York Mercantile Exchange. It lost 84 cents to $120.67 on Friday.
Brent crude, the pricing standard for international trading, gave up $2.13 to $119.88 per barrel.
The dollar rose to 134.81 Japanese yen from 134.37 yen. The euro fell to $1.0493 from $1.0518.
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