U.S. bonds slide as oil prices rise and investors focus on inflation data
TLT•U.S. Treasuries fell as oil prices remained elevated and investors awaited inflation reports. The 10-year yield rose 2.8 basis points to 5.261%, while rate futures priced in an 80% chance the Fed would hold rates this month.
1. Treasury yields rise
U.S. Treasuries fell on Friday, reversing some gains from earlier in the week as oil prices remained elevated and investors looked to upcoming inflation reports for clues on the Federal Reserve’s October 27-28 policy meeting. Brent crude rose 0.7% to $104.98 a barrel, and U.S. crude futures gained 0.6% to $91.94.
2. Yields and curve
The 10-year Treasury yield rose 2.8 basis points to 5.261%, after reaching a 24-year high earlier in the week. The 30-year yield was little changed at 5.602%, while the 2-year yield climbed 5.2 basis points to 4.808%. The 2-year/10-year yield spread narrowed to 45.3 basis points from 46.7 basis points.
3. Inflation outlook
Investors awaited the Consumer Price Index and Producer Price Index reports due Wednesday and Thursday. Rate futures priced in an 80% chance the Fed would hold rates at its meeting this month. Nomura economist Ruchir Sharma said core CPI likely decelerated in September as a temporary boost to wireless telecom prices faded.
