Treasurys Rise Modestly After Tame Inflation Data

STEPHEN BERNARD

NEW YORK (AP) — Treasury prices rose modestly Tuesday as investors balanced positive news from a tame inflation report against increasing supply from corporate and sovereign issues that compete against government debt.

In afternoon trading, the yield on the benchmark 10-year Treasury note fell to 3.32 percent from 3.34 percent late Monday. Its price rose 4/32 to 100 15/32.

Earlier Tuesday the Labor Department reported that its measure of wholesale inflation prices, the Producer Price Index, rose less than expected in October. The PPI rose 0.3 percent in last month, less than the 0.5 percent forecast by economists polled by Thomson Reuters, following a decline of 0.6 percent a month earlier.

The data reinforced assurances from from Federal Reserve chairman Ben Bernanke a day earlier that inflation would not be a concern in the near future.

Nick Kalivas, a vice president of financial research at MF Global, said optimism from the economic report was tempered by an increase in supply from corporate and foreign governments planning to issue bonds in the coming weeks. The added supply can reduce demand and compete with U.S. government-backed debt, dragging down prices and pushing yields higher.