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US Treasury yields fall: 10-year drops below 5.11% as investors await inflation data
US Treasury yields fall as the 10-year yield drops below 5.11%, while investors assess September CPI data and await more US economic reports.
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US Treasury yields fell on Thursday as investors moved towards safer investments. Treasury prices rose as investors sold some technology stocks and moved their money into US government bonds. Investors were also waiting for more economic data, including inflation figures, to understand the direction of the US economy.
The 10-year US Treasury yield dropped below 5.11%. The benchmark 10-year Treasury yield fell by more than 8 basis points to 5.102%. The 30-year Treasury yield also declined by more than 8 basis points to 5.439%. Meanwhile, the 2-year Treasury yield fell by more than 5 basis points to 4.751%, according to CNBC.
US Treasury yields today
Other US Treasury yields also moved lower. The latest figures in the provided Treasury yield table showed the 10-year yield at 5.089%, down 0.101 percentage points. The 1-month Treasury yield stood at 3.99%, down 0.003 percentage points, while the 1-year yield was at 4.482%, down 0.017 percentage points.
The 2-year Treasury yield stood at 4.766% in the same table. It was down 0.036 percentage points. The 30-year Treasury yield was at 5.42%, down 0.104 percentage points, while the 6-month yield fell to 4.369%, down 0.006 percentage points. However, the 3-month Treasury yield moved in the opposite direction, rising 0.005 percentage points to 4.20%, according to CNBC.
Treasury yields and bond prices move in opposite directions. This means that when Treasury prices rise, their yields generally fall. One basis point equals 0.01 percentage points. Therefore, an 8-basis-point decline means a drop of 0.08 percentage points in the yield.
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US inflation rate in September
Investors were assessing the latest US inflation report released on Wednesday. The September Consumer Price Index (CPI), which measures changes in the prices of goods and services across the US economy, came in higher than economists had expected. The report was released by the US Bureau of Labor Statistics.
Overall consumer prices rose 0.6% in September and 3.7% over the past year. Economists surveyed by Dow Jones had expected monthly inflation of 0.6% and annual inflation of 3.6%. This means monthly inflation matched expectations, but annual inflation was higher than forecast, according to CNBC.
Core inflation also came in higher than expected. Core CPI, which excludes food and energy prices because they can change sharply, increased 0.3% in September and 2.6% over the year. Economists had expected increases of 0.2% monthly and 2.5% annually.
Higher gasoline prices played a major role in September's inflation increase. The report was expected to show strong inflation partly because energy prices had risen sharply. Gasoline prices increased 9.1% and accounted for half of the rise in overall CPI. The broader energy index also jumped 5.2%.
US economic data to watch
Investors were waiting for more US economic reports later on Thursday. These included the Producer Price Index (PPI), September retail sales figures and weekly initial jobless claims. PPI measures changes in prices received by producers, retail sales provide information about consumer spending, and initial jobless claims show how many people filed for unemployment benefits for the first time, according to CNBC.
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Fed rate hike chances after CPI data
The inflation report has increased attention on the Federal Reserve's next interest rate decision. The central bank's next policy meeting was only two weeks away. Higher-than-expected inflation raised concerns that the Fed might increase interest rates instead of keeping them unchanged.
Expectations of a Fed rate hike rose sharply after the CPI report. Deutsche Bank analysts said the probability of a rate increase reached an intraday peak of 58% after the inflation figures were released. They added that the probability remained above 50% for around half an hour, as quoted by CNBC.
However, concerns about artificial intelligence and tighter credit conditions quickly reduced those expectations. Investors were also weighing risks linked to AI and the availability of credit. These concerns helped reverse the sharp increase in expectations for a Fed rate hike.
Traders were pricing in a 31% chance of a Fed rate hike at the next meeting. According to the CME FedWatch Tool, the probability had fallen to 31% after rising to an intraday peak of 58% following the inflation report. This showed that traders had become less convinced that the Fed would raise rates at its upcoming meeting.
