U.S. Treasury Yield Curve Steepens on Rising Inflation Expectations (Daniel Kruger, Annie Pinkert)

  The increasing gap in yields ``is about the Fed not hiking when inflation still seems to be rising,'' said David Ader, head of U.S. government bond strategy at RBS Greenwich Capital in Greenwich, Connecticut.

  By Daniel Kruger and Annie Pinkert

  March 27 (Bloomberg) -- Ten-year U.S. Treasury note yields were the highest since June relative to those on two-year securities as consumers boosted their expectations for inflation.

  Heightened concern that inflation will accelerate comes after the Federal Reserve last week abandoned its bias toward further interest-rate increases. From August through the Fed's March 21 meeting, two-year yields had been above 10-year yields as investors were confident inflation was under control.

  The increasing gap in yields ``is about the Fed not hiking when inflation still seems to be rising,'' said David Ader, head of U.S. government bond strategy at RBS Greenwich Capital in Greenwich, Connecticut.

  The yield on the benchmark 10-year note increased 1 basis point, or 0.01 percentage point, to 4.61 percent at 2:35 p.m. in New York, according to bond broker Cantor Fitzgerald LP. The price of the 4 5/8 percent security due in February 2017 declined 1/32, or 31 cents per $1,000 face amount, to 100 1/8. Bond yields move inversely to prices.

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