US yields fall after in-line inflation data, more AI-related company fears
TLT•US Treasury yields fell after inflation data matched expectations and the economy grew faster than expected in the third quarter. The 10-year yield was down 6.5 basis points at 4.98%, while rate futures priced in a 78% chance of a December rate hike.
1. Yields fall after data
US Treasury yields fell on Thursday as investors digested in-line inflation data and jitters about AI-related spending, a day after the Federal Reserve held interest rates steady. The Personal Consumption Expenditures Price Index rose 0.5% last month, in line with expectations, while the economy grew at a 3.4% annualized rate in the third quarter.
2. Rate expectations shift
Rate futures priced in about a 78% chance of a 25-basis-point hike at the Fed’s December meeting, down from about 83% before Thursday’s inflation and growth data. The 10-year Treasury yield fell 6.5 basis points to 4.98%, the 30-year yield declined 4 basis points to 5.321%, and the two-year yield fell 8.7 basis points to 4.648%.
3. AI spending concerns
Alphabet’s results rekindled concerns about AI spending and pushed stocks down. Jefferies chief US economist Thomas Simons said the data could prompt investors to question how much further the economy can grow; Spartan Capital Securities chief market economist Peter Cardillo said much of the GDP growth came from spending in AI.
