A rally in U.S. government debt gained momentum Thursday morning after details of January's producer-price index offered some hope of easing price pressures for the Federal Reserve's preferred inflation measure.

What's happening

-- The yield on the 2-year Treasury BX:TMUBMUSD02Y dropped 4.7 basis points to 4.318%, from 4.365% on Wednesday. Yields move in the opposite direction to prices.

-- The yield on the 10-year Treasury BX:TMUBMUSD10Y fell 8.2 basis points to 4.554%, from 4.636% on Wednesday.

-- The yield on the 30-year Treasury BX:TMUBMUSD30Y fell 6.4 basis points to 4.771%, from 4.835% on Wednesday.

-- Wednesday's closing level for the 2-year rate was the highest since Jan. 13. Ten- and 30-year yields finished Wednesday's session at their highest levels since Jan. 23-24.

What's driving markets

Data released Thursday showed that wholesale prices rose sharply in January - a fresh sign of persistent inflation pressures. The producer-price index increased 0.4% last month versus the 0.3% median estimate of economists, and the increase for the past 12 months rose to 3.5% from 3.3%. However, a closer look at the report's details offered glimmers of hope that the Fed's preferred inflation measure, the personal-consumption expenditures price index, or PCE, can start to cool."Despite a hotter-than-expected producer-price index, some of the components of that report which feed into the PCE came in weaker than expected, such as health care, airlines, financial services, and insurance," said Lawrence Gillum, a Charlotte, N.C.-based chief fixed-income strategist for broker-dealer for LPL Financial. "You could also argue that positioning is also an issue. There is always going to be short positions and some short-covering." The 10-year Treasury yield was on track to break a five-day streak of advances that took the benchmark rate to its highest level since Jan. 23 on Wednesday, following a hotter-than-expected U.S. consumer-price index for January. The annual headline CPI inflation rate edged up to 3%, causing traders to mostly price in just one 25-basis-point rate cut by the U.S. central bank this year.Separately on Thursday, initial jobless-benefit claims fell to 213,000 for the week that ended Feb. 8. That's below the 215,000 median estimate of economists polled by The Wall Street Journal. Still ahead is the Treasury's $25 billion auction of 30-year bonds, with results set to be announced just after 1 p.m. Eastern time.

-Vivien Lou Chen -Jamie Chisholm

For more from MarketWatch: http://www.marketwatch.com/newsviewer

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

February 13, 2025 10:07 ET (15:07 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.