Treasury yields rise slightly as rate-hike bets ease after inflation data
TLT•The 10-year Treasury yield rose 4.68 basis points to 5.302%, its highest level since mid-June 2007, as markets priced a 63% chance the Federal Reserve will hold rates steady next month. Core PCE inflation was 3.0% year over year in August.
1. Yields edge higher
Longer-dated U.S. Treasury yields rose Wednesday afternoon, while the two-year yield was nearly flat, as investors weighed August inflation data and reduced expectations for an October Federal Reserve rate hike. The 10-year yield gained 4.68 basis points to 5.302%, and the 30-year yield rose 5.42 basis points to 5.6482%; the two-year yield added 0.21 basis points to 4.891%.
2. Inflation and rate bets
The Personal Consumption Expenditures Price Index rose 0.3% in August after a downwardly revised 0.1% increase in July. Core PCE inflation was up 3.0% year over year, matching the downwardly revised July increase. Markets priced a 63% chance that the Fed will hold rates steady next month, compared with 55% before the data.
3. Monthly moves and next data
Ten-year and two-year yields were each up about 53 basis points for September, their biggest monthly advances since September 2022 and February 2023, respectively. Investors will watch comments from central bank officials and the September nonfarm payrolls report due Friday.
