Bond Report: Treasury yields carve out fresh multi-year highs, post weekly gains after September’s hot CPI data

by | Oct 14, 2022 | Stock Market

Two-, 10- and 30-year Treasury yields climbed to the highest levels of the past 11 to 15 years on Friday after this week’s consumer-price index report for September left policy makers on track to keep aggressively hiking interest rates.

What’s happening
The yield on the 2-year Treasury
rose 5.8 basis points to 4.507% — the highest since Aug. 8, 2007 — from 4.449% on Thursday, based on 3 p.m. data, according to Dow Jones Market Data. The rate was up 20.1 basis points for the week.

The yield on the 10-year Treasury
advanced 5.3 basis points to 4.005% — the highest since Oct. 15, 2008 — from 3.952% on Thursday. It rose 12.2 basis points this week.

The yield on the 30-year Treasury
climbed 4 basis points to 3.974% after factoring in reopening levels. Friday’s yield was the highest since Aug. 1, 2011.

What’s driving markets Traders and investors continued to react to Thursday’s U.S. consumer-price index — which included a year-over-year headline rate of 8.2%, along with a hotter-than-expected monthly core reading of 0.6%. The data secured the likelihood of another 75 basis point rate hike by the Federal Reserve in November.Yields ended the New York session higher on Friday as traders factored in a greater possibility that Federal Reserve officials will raise the benchmark interest rate target above 5% in 2023. Friday’s rise in yields was led by the 1-year rate, which soared above 4.5% and is sensitive to expectations around the path of Fed policy.In an interview with Yahoo! Finance, San Francisco Fed President Mary Daly said she thinks lifting the benchmark interest rate to between 4.5% and 5% next year and getting above 4% this year is still a “reasonable” way to think about rates. Meanwhile, one of her colleagues, Kansas City Fed President Esther George, backed further rate hikes, but said the central bank needs to be careful about the pace of those moves.Data released on Friday showed that U.S. retail sales fell flat in September as high inflation and rising interest rates took a bite out of consumers’ willingness to spend. Sales at retailers h …

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