US Treasurys

Treasury yields fall slightly as traders await Thursday's CPI report

Treasury yields fell slightly Wednesday as investors absorbed stronger-than-expected September's producer price index inflation figures, and awaited Thursday's CPI report.

The 2-year Treasury yield was down 2.9 basis points at 4.287% at 4:00 p.m. ET. The benchmark 10-year Treasury yield ticked down 4 basis points to 3.898%.

Yields and prices have an inverted relationship and one basis point is equivalent to 0.01%.


Wholesale prices came in hotter than expected. September's producer price index data, which measures wholesale prices of goods, rose 0.4%, according to a Wednesday report from the Bureau of Labor Statistics. Excluding food, energy and trade services, PPI increased 0.3%.

Economists surveyed by Dow Jones were expecting headline PPI to add 0.2%.

Investors are also bracing for Thursday's CPI data as they look for signs on whether the Federal Reserve's interest rate hikes are working as a measure to throttle persistent inflation.

In recent weeks, Fed speakers have said they are not satisfied with the development of inflation and will not shy away from hiking interest rates further to change this. Concerns that the central bank is dragging the U.S. into a recession have grown louder in response.

The Fed's September meeting minutes were released Wednesday, showing that central bank officials expect higher rates to stay in place.

"Several participants underlined the need to maintain a restrictive stance for as long as necessary, with a couple of these participants stressing that historical experience demonstrated the danger of prematurely ending periods of tight monetary policy designed to bring down inflation," the minutes stated.

On the other hand, some traders took one comment in the minutes as a signal the Fed could back off its rapid tightening if there was more financial markets turbulence.

"Several participants noted that, particularly in the current highly uncertain global economic and financial environment, it would be important to calibrate the pace of further policy tightening with the aim of mitigating the risk of significant adverse effects on the economic outlook," the minutes stated.

The bond market are also contending with mixed messages from the Bank of England regarding its emergency bond-buying program and whether this could be extended beyond its original end date this Friday. The program was implemented to stabilize the British pound in late September after a new U.K. budget sent the country's economy into turmoil.