Treasury yields fall as markets digest hotter-than-expected inflation data
U.S. Treasury yields fell on Friday as markets digested Thursday’s higher-than-expected consumer price index reading and kept a close eye on the U.K. economy as the Bank of England’s emergency bond-buying program is due to end.
Markets continued to absorb Thursday’s consumer price index reading, which showed that inflation had risen more than expected in September. The price of goods had increased by 0.4% for consumers last month and was up 8.2% from a year ago. The program is intended to stabilize the British pound and U.K. government bonds, which plummeted after the U.K. government announced its so-called “mini-budget” last month.
U.S. Treasury yields fell on Friday as markets digested Thursday ‘s higher-than-expected consumer price index reading and kept a close eye on the U.K. economy as the Bank of England’s emergency bond-buying program is due to end. The yield on the 10-year Treasury was at 3.9197%, down by 3 basis points at around 4:40 a.m. ET. It had briefly surpassed the 4% mark on Thursday following the release of the inflation report. The 2-year Treasury yield was down by 1 point to 4.4325%, after having risen to levels last seen in August 2007 on Thursday . Yields and prices have an inverted relationship and one basis point is equivalent to 0.01%.Markets continued to absorb Thursday ‘s consumer price index reading, which showed that inflation had risen more than expected in September. The price of goods had increased by 0.4% for consumers last month and was up 8.2% from a year ago. The Federal Reserve has been hiking interest rates to push back against persistent inflation , despite investor concerns about this leading to a recession. Analysts are expecting another 75 basis point rate hike to be announced at the central bank’s next meeting in early November . Traders will gain further insights on Friday as retail sales data for September and the preliminary consumer sentiment figures for October are released. The economic turmoil in the U.K. is also weighing on markets as the Bank of England’s emergency bond-buying program is set to end on Friday . The program is intended to stabilize the British pound and U.K. government bonds , which plummeted after the U.K. government announced its so-called “mini-budget” last month . The yield on the British 10-year Gilt was last at 3.986%, down by around 20 basis points.
