Former Federal Reserve Chairman Alan Greenspan said inflation isn’t “about to run,” though it may pick up later.

(Bloomberg) — Treasury yields approached the lowest level since October before a report today economists predict will show consumer-price inflation stayed below the 10-year average in April.

Former Federal Reserve Chairman Alan Greenspan said inflation isn’t “about to run,” though it may pick up later. Fed Chair Janet Yellen is scheduled to speak today. Data this month showed employment and manufacturing gains, while retail sales fell short of expectations. The mixed figures are emblematic of what Pacific Investment Management Co. calls a “new neutral” outlook, characterized by a convergence of the largest economies to slower, yet more stable, growth rates.

“There’s general feeling that central banks, including the Fed, are not in a hurry to raise interest rates, given the recent local and global data,” said Peter Osler, head of rates strategy at broker Marex Spectron Group Ltd. in London. “As far as monetary policy is concerned, it’s either delay in hikes or introducing cuts for developed countries. Lack of inflation in the U.S. will help to cap yields.”

Benchmark 10-year yields were at 2.54 percent at 7:01 a.m. in New York, based on Bloomberg Bond Trader prices. The 2.5 percent note due in May 2024 rose 1/32, or 31 cents per $1,000 face amount, to 99 21/32. The rate fell to 2.52 percent yesterday, the lowest since Oct. 31.

Global bond yields are declining. The average yield to maturity on bonds in Bank of America Merrill Lynch’s Global Broad Market Sovereign Plus Index fell to 1.58 percent yesterday, the lowest since June 18. The rate on euro-area securities fell to a record-low 1.47 percent.

Spread narrows

The yield difference between two- and 10-year notes, or yield curve, was little changed at 217 basis points after narrowing to 216 basis points on May 2, the least since July 4, based on closing rates. A flattening yield curve usually means investors are betting on slower economic growth.

The Bloomberg Global Developed Sovereign Bond Index returned 4.2 percent this year through yesterday, rebounding from a 4.6 percent loss in 2013. The average yield to maturity on bonds in Bank of America Merrill Lynch’s Global Broad Market Sovereign Plus Index fell to 1.58 percent yesterday, the lowest since June 18. Inflation data

Treasuries rallied yesterday on speculation the European Central Bank is preparing measures to cut borrowing costs. Data today showed the euro-area grew 0.2 percent in the last quarter, half as much as economists had forecast. Separate reports showed French growth unexpectedly stalled and economies from Italy to the Netherlands shrank.

U.S. consumer prices rose 2 percent in April from a year earlier, based on a Bloomberg News survey of economists, versus 1.5 percent in March. The reading would be the highest since July, and compares with the average of 2.4 percent over the past decade.

Prices paid to U.S. factories and service producers rose 2.1 percent, data showed yesterday. It was the biggest increase since March 2012. Retail sales rose 0.1 percent in April. A survey of economists by Bloomberg News projected 0.4 percent.

“I’m not forecasting that inflation is about to run,” Greenspan said yesterday at a forum organized by the Peter G. Peterson Foundation. “I doubt it very much. But the presumption that it’s no longer on the horizon I think is a mistake.”

Manufacturing report

The difference between yields on 10-year notes and similar- maturity Treasury Inflation Protected Securities, a gauge of trader expectations for consumer prices over the life of the debt, was little changed at 2.17 percentage points. The average for the past decade is 2.21.

Data today will show New York-area manufacturing rose in May, nationwide industrial production was unchanged in April, and weekly initial claims for unemployment insurance were little changed, according to economists in separate Bloomberg surveys.

Yellen is scheduled to address the U.S. Chamber of Commerce in Washington today. She said last week the recovery is uneven and the economy still requires support.

“The ‘new neutral’ looking forward is a story about a global economy that isn’t recovering, it’s a global economy that’s converging to trend rates of growth that will be sluggish,” Richard Clarida, an executive vice president at Pimco, said in a telephone interview. The company, based in Newport Beach, California, runs the world’s biggest bond fund.

The Treasury Department is scheduled to announce today the size of an auction of 10-year TIPS scheduled for May 22.

The sale will probably be for $13 billion, the same as the prior offering in March, according to Stone & McCarthy Research Associates, an economic advisory company in Princeton, New Jersey.

The Treasury also plans to report on overseas demand for U.S. securities in March. China is the largest foreign holder of Treasuries with a $1.27 trillion stake. Japan increased its position to a record $1.21 trillion on February.

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