Concerns that the Federal Reserve will move aggressively to quash inflation as the economy expands more rapidly led to a sharp drop in the prices of U.S. Treasury notes Wednesday and may have helped stock markets stay in the red.Two-year and ten-year Treasury bonds both traded lower as investors began to bet more heavily that rising inflation will force a faster-than-expected increase in interest rates. Rates for the debt sagged even though the government reported strong interest in some US$15 billion worth of paper it floated on Wednesday.All major indices traded lower for the bulk of Wednesday’s session. The Dow fell 64.08 to close at 10,368.44. The Nasdaq lost 1.6 percent, tumbling 32.92 percent to 1,990.61.The drop in Treasuries is just the latest sign that investors expect interest rates to rise, and possibly to climb faster than some had predicted. Two key pieces of data may help answer the question.On Thursday, the government will release its Producer Price Index for May. Economists are predicting an increase of .6 percent for the index, which measures inflation at the wholesale level. That would be lower than the .7 percent clocked in April.The numbers, usually released on Friday, will be released a day… Read full this story
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