The two-year Treasury yield dropped 7 basis points to 4.730%, and the 10-year yield fell 8.4 basis points to 5.105%, per Tradeweb data. This shift follows Wednesday’s volatility, where market pricing for an October 28 interest-rate hike spiked to 49% immediately following the Consumer Price Index release, before settling back to a 29% probability.
In section Market Quotes
Treasury Yields Retreat as Markets Reassess Fed Rate Outlook
A sharp bond selloff triggered by hotter-than-anticipated U.S. inflation data cooled during Asian trading hours on Thursday. Investors recalibrated their expectations for Federal Reserve policy, while a 1.4% dip in Brent crude prices to $104.58 per barrel provided additional relief to the Treasury market.
Annual inflation reached 3.7%, outpacing the 3.6% consensus estimated by Wall Street Journal analysts and accelerating from August’s 3.4% level. Jeffrey Roach, chief economist at LPL Financial, noted that the report complicates the Federal Reserve’s path toward price stability. Meanwhile, Julia Hermann of New York Life Investment Management suggested that while the economy's resilience may imply a higher neutral policy rate, sustained yield increases risk undermining the growth that has allowed markets to weather tighter financial conditions thus far.
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