Treasury yields jump as October consumer inflation beats expectations
TLT•U.S. consumer prices rose 0.4% in October, above economists’ expectations, while core prices increased 0.3%. Treasury yields climbed as traders priced in a 29-basis-point Fed hike in December, with the two-year yield up 14.44 basis points to 4.691% and the 10-year yield up 7.17 basis points to 4.934%.
1. Inflation lifts yields
Treasury yields jumped after U.S. consumer prices rose 0.4% in October, following a 0.6% increase in September. Core prices, which exclude food and energy, rose 0.3%, matching September’s gain.
2. Fed hike expectations
Fed funds futures traders were pricing in a 29-basis-point increase at the Federal Reserve’s December 8-9 meeting, reflecting rising expectations of a possible half-point move. Fed Governor Christopher Waller said a 50-basis-point hike should be considered if the inflation picture worsens.
3. Treasury yields rise
The two-year Treasury yield was up 14.44 basis points at 4.691%, while the benchmark 10-year yield rose 7.17 basis points to 4.934%.
