Bond yields slipped Friday after reaching milestone highs following hot inflation data, as a key report on retail sales awaits.
What’s happening
-
The yield on the 2-year Treasury
TMUBMUSD02Y,
4.430%
fell 3 basis points to 4.44%, after finishing on Thursday at the highest level since Aug. 9, 2007. Yields move in the opposite direction to prices. -
The yield on the 10-year Treasury
TMUBMUSD10Y,
3.904%
fell 2 basis points to 3.92%. -
The yield on the 30-year Treasury
TMUBMUSD30Y,
3.894%
eased 3 basis points to 3.90%. Thursday’s yield was the highest since Jan. 3, 2014.
What’s driving markets
Data released on Thursday showed the consumer price index rising a hotter-than-forecast 0.4% in September, with the year-over-year rate at 8.2%.
“The prospect of a 75bp hike at the November FOMC meeting received a boost last week from the surprise fall in the U.S. unemployment rate last week to 3.5%, and the rise in core inflation to 6.5% in September will only harden the Fed’s conviction that more tightening medicine is required,” said strategists at Societe Generale.
Friday will also see the release of key economic data, with September retail sales, and the October release of the University of Michigan consumer sentiment report, due for release. Kansas City Fed President Esther George, and Fed Gov. Lisa Cook, also are due to speak.
Traders also will be looking at the situation in the U.K., where a temporary Bank of England gilt purchase program is slated to expire. Gilt yields
TMBMKGB-30Y,
fell for a second day on the prospect of further fiscal policy reversals from the U.K. government.
