U.S. bonds slip as investors await inflation data, Fed signals
TLT•U.S. Treasury yields rose Friday as investors awaited inflation reports and signals on the Federal Reserve’s next move. The 10-year yield gained 2.8 basis points to 5.261%, while futures priced in an 80% chance the Fed would hold rates this month.
1. Yields edge higher
Treasuries fell Friday, giving back some of the week’s gains. The 10-year yield rose 2.8 basis points to 5.261%, while the 30-year yield edged up to 5.608% and the 2-year yield climbed 4.4 basis points to 4.799%. For the week, 10-year yields fell 3.5 basis points, their largest weekly decline in two months.
2. Inflation in focus
Investors looked ahead to 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 October meeting. The University of Michigan’s one-year inflation expectations rose to 4.7% in October from 4.6% in September, while its consumer sentiment index fell to 46.3 from 48.1.
3. Curve flattens
The spread between 2-year and 10-year yields narrowed to 45.5 basis points from 46.7 basis points late Thursday. Truist Wealth’s Chip Hughey said 10-year yields may be nearing the higher end of their near-term range, barring a flare-up in the Middle East, and noted buyers had stepped in near 5.30%-5.35%.
