Traders work on the floor of the New York Stock Exchange (NYSE) on September 15, 2026 in New York City, USA.
Gina Moon | Reuters
U.S. Treasury yields were spooked as traders focused on August’s weaker-than-expected U.S. inflation data as they awaited the release of the September jobs report later in the week.
of 2 years treasury Note yields changed a little last time, 10 year treasury Yields rose nearly 4 basis points to 5.293%, recovering after a brief pullback in early trading. Benchmark yields hovered around their 2007 highs. of 30 year government bond rose nearly 5 basis points to 5.641%, near its highest level since 2002.
One basis point equals 0.01%, and yields and prices move in opposite directions.
Consumer prices rose more than expected in August from a year earlier, the Federal Reserve’s key inflation measure reported on Wednesday.
The Consumer Expenditure Price Index rose a seasonally adjusted 0.3% last month, bringing the 12-month rate of increase to 3.4%, the Commerce Department said Wednesday. Economists surveyed by Dow Jones had expected increases of 0.3% and 3.7%, respectively.
“Adjusting the sails.”
“Indeed, the inflation fire is not as hot as markets expected in August, and bond yields are adjusting their rudder as investors reconsider exactly how many Fed rate hikes are needed to get inflation back on target,” FWDBONDS Chief Economist Christopher Rapkey wrote in response to the announcement.
PCE, which excludes food and energy, rose 0.2% in August, taking the annual core level to 3%. Expectations were 0.3% and 3.3%, respectively.
Although the Fed officially follows the headline PCE number, officials generally believe the core number is a more accurate gauge of long-term inflation trends.
Wednesday’s good news on inflation came after recent comments from Fed officials led to a reassessment of monetary policy expectations. At one point this month, traders were pricing in a more than 80% chance of a quarter-point rate hike in October. Those odds have remained around 37% since Wednesday’s announcement, according to CME Group’s FedWatch tool, with traders pushing their expectations for the next rally to December.
Yields initially fell on the news, but began to rise as traders began to look ahead to the September U.S. jobs report, due at 8:30 a.m. ET on Friday. Economists expect the economy to add 84,000 jobs this month.
If Friday’s numbers are higher than expected, like Wednesday’s ADP private payrolls report, yields could rise.
— With additional reporting by CNBC’s Jeff Cox
