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Treasury yields rose Wednesday as investors awaited data on inflation at the producer level, following figures that showed consumer inflation running at its hottest since 1981.
What are yields doing?
-
The yield on the 10-year Treasury note
TMUBMUSD10Y,
2.738%
was 2.737%, compared with 2.724% at 3 p.m. Eastern on Tuesday. Yields and debt prices move in opposite directions. -
The 2-year Treasury note yield
TMUBMUSD02Y,
2.397%
stood at 2.402% versus 2.387% on Tuesday afternoon. -
The 30-year Treasury bond yield
TMUBMUSD30Y,
2.832%
was 2.828% up marginally from 2.826% late Tuesday, which was its highest since May 21, 2019.
What’s driving the markets?
A selloff that had driven the 10-year yield higher for seven straight sessions let up on Tuesday after the March consumer-price index showed an 8.5% year over year rise, its hottest reading since 1981. But the core reading — which strips out volatile food and energy prices — slowed, rising 0.3% for the month versus expectations for a 0.5% rise, though the year-over-year rate still nudged higher to 6.5%.
Read: Has U.S. inflation peaked? Don’t bet on it
The slower rise in the core prompted a debate over whether inflation may be peaking. Meanwhile, investors had already priced in very aggressive rate increases and balance sheet reduction in their effort to get a grip on inflation.
See: Peak inflation? What’s next for U.S. as markets debate hottest CPI in more than 40 years.
The March producer-price index is set for release at 8:30 a.m. Economists surveyed by The Wall Street Journal expect the index to show a 1.1% monthly rise after a 0.8% increase in February.
What do analysts say?
“Given all the gloom around the worsening inflation landscape and worries about stagflation, some investors are likely grabbing any piece of optimism that they can. However, yesterday’s reversal in some of the recent moves in the bond market was probably as much down to an overdue correction following the sharp selloff in Treasurys over the past week,” said Raffi Boyadjian, lead investment analyst at XM.
