By Ross Kerber
Jun 9 (.) – Long-term U.S. Treasury yields fell for the second day in a row on Wednesday, as investors positioned ahead of inflation data and a debt auction, leading to a return on debt. 10-year bond down 1.5% for the first time since May 7.
* Benchmark yield fell 5.4 basis points to 1.4739% in morning trading.
* The yield spread between 2- and 10-year papers, viewed as an indicator of economic expectations, was 133 basis points, about 5 basis points below Tuesday’s close.
* Ellis Phifer of Raymond James said investors appeared to be optimistic ahead of the consumer price report due Thursday. Strong CPI data from a month ago helped push the 10-year bond yield to 1.707% in mid-May, but investors don’t seem as concerned about inflation now.
* “Inflation is higher, but it doesn’t seem to be accelerating at a rate that makes the bond market nervous,” Phifer said.
* Booming demand as the US economy reopens may continue to drive inflation, but many economists expect price increases to be temporary.
* Investors expect an auction of $ 38 billion in 10-year bonds later in the session.
* The yield on the 2-year bond, which normally moves in line with interest rate expectations, fell less than 1 basis point to 0.1468%.
(Reporting by Ross Kerber in Boston, additional reporting by Kate Duguid in New York. Edited in Spanish by Janisse Huambachano)