2-year bond yields rise Treasury yields break 3.8% due to increased Fed rate hike expectations.
Short-term US Treasury yields rose further on Thursday as investors weighed the possibility of the Federal Reserve raising interest rates further at its meeting next week.
The 2-year Treasury yield, which is one of the most affected by Fed decisions, rose 4 basis points to 3.823%, its highest level since 2007. It has risen about 25 points since Tuesday.
Yields move in the opposite direction of prices, and one basis point equals 0.01%.
Meanwhile, the 10-year Treasury note yield rose slightly more than 3 basis points to 3.445%. The 30-year Treasury bond yield was also 3 basis points higher, at 3.499%.
The moves come after the release of the producer price index on Wednesday, which fell 0.1% in August, a small dip caused by rising inflationary pressures, according to the Bureau of Labor Statistics. The core PPI increased by 0.2% when food, energy, and trade services were excluded.
The main story of the week, however, was the August consumer price index report, which showed inflation rising 0.1% month on month, a higher-than-expected reading that sent markets tumbling on their worst day since mid-2020.
Some analysts believe the Fed will raise interest rates by a full percentage point at its next meeting on September 20-21.
This week’s CPI data was “terrible,” according to Brad McMillan, chief investment officer at Commonwealth Financial Network, but there are signs of improvement on the horizon.
“The headline figure remained constant at 0.2 percent, but the annual figure fell significantly, from 9.8 percent to 8.7 percent” (a much bigger drop than the CPI)
“Things aren’t so bad when you look at the details,” McMillan added. “The CPI and market reaction indicate that inflation will continue to rise at an accelerating rate, but not all data agree.” Even with much of the data as it is, it appears that inflation will end the year lower than it is now.”
Investors will be watching for a slew of data releases on Thursday, including retail sales, import and export prices, jobless claims, manufacturing and industrial production, and Energy Information Agency gas stocks.
Thursday’s auction also includes four-week and eight-week bills.
Kundan Goyal has 6+ years of experience in news editing and market research. He has helped businesses of all sizes make strategic decisions and predict future trends. Kundan only publishes content that will help them grow their sales and revenue. He publishes business news in many different categories to help industry’s learn more about any product.In his spare time, he enjoys cooking and listening music .
