Treasury yields rise despite another report that shows inflation is falling
U.S. Treasury yields were higher on Wednesday, recovering some of their losses from the previous session, as investors digested inflation data that suggested the Federal Reserve may be done raising rates.
The 2-year Treasury yield was up 10 basis points at 4.91%, after dropping by as many as 21 basis points on Tuesday. The benchmark 10-year Treasury also climbed 10 basis points to 4.54%. It had lost 18 basis points to tumble below the 4.5% mark on Tuesday.
Yields and prices move in opposite directions. One basis point equals 0.01%.
Treasurys
| TICKER | COMPANY | YIELD | CHANGE |
|---|---|---|---|
| US1M | U.S. 1 Month Treasury | 5.37% | +0.009 |
| US3M | U.S. 3 Month Treasury | 5.396% | UNCH |
| US6M | U.S. 6 Month Treasury | 5.389% | -0.001 |
| US1Y | U.S. 1 Year Treasury | 5.211% | +0.008 |
| US2Y | U.S. 2 Year Treasury | 4.948% | +0.015 |
| US10Y | U.S. 10 Year Treasury | 4.467% | -0.008 |
| US30Y | U.S. 30 Year Treasury | 4.573% | -0.007 |
The rebound in yields came after another encouraging inflation report. The producer price index for October showed a surprise decline of 0.5%. Economists surveyed by Dow Jones were expecting the index to rise 0.1%.
The PPI for goods drove the decline, falling 1.4%. The prices for final demand services were flat month over month.
Treasury yields had declined Tuesday, following the release of the October consumer price index reading, which came in lower than expected. The annual rate for the so-called core CPI hit a two-year low of 4%.
On a monthly basis, the core-CPI, which excludes food and energy prices, reflected a 0.2% increase. Economists previously surveyed by Dow Jones were expecting the figures to come in at 4.1% and 0.3%, respectively.
The data led markets to cut almost any chance of a rate hike in December, the CME Group's FedWatch tool showed. The likelihood of rates remaining unchanged last stood at 99.8% according to the data.
Questions around whether the Fed would need to hike rates further to bring inflation back to its 2% target have been circling since the central bank's last meeting, where it left rates unchanged but kept the door open for rates to head higher still.
Additional inflation data is due out on Wednesday by way of the producer price index, which tracks prices at the wholesale level. Retail sales figures for October are also expected.
Elsewhere, the October reading of the U.K. inflation, which was released Wednesday, came in lower than expected at 4.6% on an annual basis.