Treasury yields inch higher ahead of PCE inflation data

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U.S. Treasury yields were slightly higher on Friday as investors awaited the latest personal consumption expenditures price index, the Federal Reserve's favored inflation measure.

At 3:15 a.m. ET, the yield on the 10-year Treasury was up by one basis point to 4.2980%. The 2-year Treasury yield was last at 4.7244% after rising by less than one basis point.

Yields and prices move in opposite directions. One basis point equals 0.01%.

Investors are looking to the release of the latest inflation data that could provide hints about the state of the economy and the path ahead for monetary policy.

The personal consumption expenditures price index is expected to be flat in May from the previous month, and 2.6% higher on an annual basis. So-called core-PCE, which excludes food and energy prices, is anticipated to have risen 0.1% on a monthly basis and 2.6% on from a year earlier.

Personal income and spending data as well as consumer sentiment insights are also slated for Friday.

The data comes as uncertainty about what could be next for interest rates has persisted. Federal Reserve policymakers have frequently indicated they would only move to cut rates once data showed that inflation was easing toward the 2% target.

Traders were last pricing in an only 10% chance of rates being cut at the conclusion of the Fed's next meeting at the end of July, and a 64% likelihood of the first rate cut coming in September, according to CME Group's FedWatch tool.

It is also still unclear whether there will be multiple rate cuts this year or just one. Earlier in the week, Fed Governor Michelle Bowman also suggested that she was open to a further rate increase, depending on how inflation developed.