10-year Treasury yield returns to 5% as inflation data and Waller comments lift rate-hike expectations
U.S. Treasury yields jumped on Tuesday after October consumer prices came in hotter than expected, lifting the 10-year note back to 5 percent. The 10-year yield, a benchmark for mortgages, car loans and credit-card rates, rose more than 14 basis points to 5.004 percent. The two-year, which tracks short-term Federal Reserve policy more closely, added more than 20 basis points to 4.755 percent, and the 30-year rose more than 10 basis points to 5.364 percent. Yields and prices move inversely; one basis point is 0.01 percent.
The consumer price index rose 0.4 percent in October, above the 0.3 percent expected by economists polled by Dow Jones and down from 0.6 percent in September. Core CPI, which excludes food and energy, increased 0.3 percent versus a 0.2 percent forecast, matching September’s 0.3 percent gain. The report followed comments from Fed Governor Christopher Waller in London at a Bank of England central-bank conference. He said that if inflation readings are higher than expected he would support “more robust action,” including considering a 50 basis-point policy-rate increase at the December meeting, and that hiking only 25 basis points would put the Fed’s credibility at risk.
Lindsay Rosner, head of multi-sector fixed income investing at Goldman Sachs Asset Management, said strong CPI prints could push a more aggressive tightening cycle, with a December hike as the firm base case and further increases in 2027 not ruled out. Markets have largely priced in a 25 basis-point December hike, according to CME Group’s FedWatch. Wholesale inflation figures due Friday may also influence the path. Last week’s employment report showed 165,000 jobs added in October, more than double forecasts. Oil eased, with Brent crude falling below $90 a barrel for the first time since August after President Donald Trump said the war with Iran could end “fairly soon” and played down further strikes in the region.
Continue in the app — vote & join in ➔