US Treasury yields ease after CPI as Fed hike risks linger
US Treasury yields fall during the North American session on Friday following the release of US inflation data, but are poised to finish the week higher. The US 10-year Treasury yield is down one basis point to 4.951% but has gained over 16 basis points, or 3.49%, this week.
On Friday, US Treasury yields retreated during the North American session following the release of inflation data, but are expected to conclude the week higher. The 10-year Treasury yield dropped by one basis point to 4.951%, while the 30-year yield fell two basis points to 5.34%, hitting its highest level since 2007 due to surging oil prices from the escalating US-Iran conflict that has expanded to Yemen.
Core CPI data aligned with forecasts but slightly decreased, while surging PPI and heightened US yields led to hawkish Fed expectations. Money markets projected a 91% chance of a 0.25% rate increase at the upcoming Fed meeting. US consumer sentiment became more pessimistic about the economy due to rising fuel prices and trade tensions, particularly between the US and Canada.
Additionally, US financial markets' five-year inflation expectations rose to 2.46%, up from 2.37% at the start of the week. Markets will closely watch the FOMC monetary policy decision and other data such as jobs, housing, and Fed officials' speeches next week.
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