investors await Fed’s preferred inflation gauge

The U.S. 10-year Treasury yield was little changed on Friday as investors anticipated the release of a key inflation gauge.

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At 4:34 a.m. ET, the yield on the 10-year Treasury fell by nearly two basis points to 4.552%, after topping 4.57% on Thursday. Meanwhile, the 2-year Treasury yield dipped by three basis points to 4.287%.

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One basis point is equal to 0.01% and yields and prices move in opposite directions.

On Friday, investors are expecting the release of the November personal consumption expenditures price index — the Federal Reserve’s preferred inflation gauge, which will be reported by the Department of Commerce.

Fed Chair Jerome Powell signaled that the 12-month inflation rate will be over the central bank’s 2% goal, estimating 2.5% for headline inflation and 2.8% for the core print, which excludes food and energy prices. He nevertheless said the monthly move will be “much lower” than in previous months.

Analysts polled by Dow Jones, are estimating the index will rise 0.2% monthly and 2.5% annually. Core inflation is expected to add 0.2% monthly and 2.9% annually.

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This follows the Fed cutting interest rates by a quarter-percentage point on Wednesday to a target range of 4.25% to 4.50%.

Fed policymakers increased their inflation forecast and pointed to only two potential rate cuts in 2025, marking a decrease from the guidance of four potential cuts that had been signaled in September.

The U.S. government is currently on the brink of a shutdown as dozens of Republicans voted against a Trump-backed spending bill. The House Republican deal would have funded the government for three months and suspended the debt ceiling for two years.

Without an agreement, a partial government shutdown is expected to begin on Friday night.