Treasury yields pull back as rate hike bets ease after inflation data
TLT•U.S. Treasury yields fell after August inflation data showed a smaller-than-expected increase, with markets pricing a 65% chance the Fed will keep rates steady in October. The 2-year yield fell 5.19 basis points to 4.837%, while the 10-year yield declined 1.45 basis points to 5.241%.
1. Yields fall after inflation data
Yields on 2-year and 10-year U.S. Treasuries declined after expectations for a Federal Reserve rate hike in October eased following data showing U.S. inflation increased less than expected in August. Markets priced a 65% chance the Fed will keep rates steady next month, compared with 55% before the data.
2. Bond yields diverge
The 2-year yield fell 5.19 basis points to 4.837%, after touching 4.8267%. The 10-year yield declined 1.45 basis points to 5.241% after briefly rising to 5.2574%, while the 30-year yield rose 1.06 basis points to 5.6046% and was on track for a seventh consecutive daily advance.
3. Inflation and other data
The Personal Consumption Expenditures Price Index rose 0.3% in August after a downwardly revised 0.1% gain in July. Core PCE inflation rose 3.0% year over year, matching July’s downwardly revised increase. Separately, ADP data showed U.S. employment increased by 90,000 jobs in September, versus expectations for 70,000.
