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Treasury yields were rising on Wednesday, with long-dated yields around their highest since mid-July, as investors await a report on U.S. consumer inflation that has been elevated in the economic recovery phase from the COVID-19 pandemic.
What yields are doing
-
The 10-year Treasury note yield
TMUBMUSD10Y,
1.369%
was at 1.369%, compared with 1.342% at 3 p.m. Eastern Time on Tuesday. Yields for debt rise as prices fall. -
The 30-year Treasury bond yields
TMUBMUSD30Y,
2.012%
2.012%, versus 1.984% a day ago. -
The 2-year Treasury note
TMUBMUSD02Y,
0.240%
was yielding 0.241%, compared with 0.236% on Tuesday.
On Tuesday, the 10-year and 30-year Treasury yields hit their highest yields since July 14, while the 2-year touched its highest since July 13, according to Dow Jones Market Data.
What’s driving the market?
Economists surveyed by The Wall Street Journal expect the Labor Department to report the U.S. consumer-price index rose 5.3% in July from a year earlier. That is only a tick lower than that CPI’s 5.4% June reading, which showed the cost of living rising by the largest amount since 2008 as inflation spread more broadly through the U.S. economy.
The so-called core price index, excluding volatile food and energy, likely increased 4.4% from a year before, compared with the 12-month rate reading for June which hit 4.5% and stood at a 29-year high.
The month-over-month CPI rate is expected to rise by 0.5% in July, down from 0.9% in June, and by 0.4% excluding food and energy, compared with 0.9% also in the prior month. .
On Tuesday, the U.S. Senate voted 69-30 Tuesday to approve the bipartisan infrastructure bill, a move that sends the $1 trillion measure over to the House of Representatives for its approval.
Investors may also be on the lookout for a reading on inflation from the Atlanta Fed at 10 a.m., which provides its own monthly survey of year-ahead inflation expectations and inflation uncertainty.
Looking ahead, investors will be watching for an auction of $41 billion in 10-year notes at 1 p.m., which will be notable coming after the readings of inflation.
Kansas City Federal Reserve President Esther George is slated to speak at noon on Wednesday, while Atlanta Fed President Raphael Bostic was scheduled to speak at 10:30 a.m.
What analysts are saying
“A consensus of analyst expectations hint that the US consumer prices may be stabilizing near the 5.4% level printed last month. But we don’t rule out the possibility of a surprise soft print, as oil prices which account for more than half of the CPI rise fell near 20% during the month of July and may have eased the upside pressure on the consumer-end prices last month,” wrote Ipek Ozkardeskaya, senior analyst at Swissquote, in a daily research note.
“Still, it’s uncertain how second-hand vehicle prices evolved, while the bottlenecks on disrupted supply chains and the global chip shortage may have kept the pressure high on consumer prices,” the analyst wrote.
