April 10, 2018 / 1:46 PM / a year ago

U.S. TIPS breakeven rates firm as PPI rises in March

NEW YORK (Reuters) - The U.S. bond market’s gauges of inflation expectations increased modestly on Tuesday as domestic producer prices grew more than forecast in March, supporting the view that inflation is accelerating toward the Federal Reserve’s 2-percent goal.

The Labor Department said its producer price index for final demand rose 0.3 percent last month following a 0.2 percent gain in February. The PPI core rate, which excludes volatile energy and food prices, grew 0.4 percent for a third consecutive month.

At 9:27 a.m. (1327 GMT), the 10-year inflation breakeven rate, or the yield gap between 10-year Treasury Inflation Protected Securities and regular 10-year Treasury notes, was 2.09 percent, up 0.5 basis point from late Monday, Tradeweb data showed.

Reporting by Richard Leong

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