U.S. Treasury yields fell Thursday as investors looked to the release of the latest consumer price index and assessed the outlook for interest rates.
At 5:15 a.m. ET, the yield on the 10-year Treasury yield was down by around 2 basis points at 4.573%. the 2-year Treasury yield was last trading at 4.995% after falling by 1 basis point.
Yields and prices move in opposite directions and one basis point is equivalent to 0.01%.
September’s CPI is expected to show a 0.3% rise on a month-over-month basis and a 3.6% increase compared to a year ago, according to a Dow Jones survey of economists. This would be lower than August’s reading of 0.6% and 3.7% respectively.
Thursday’s report comes a day after the release of hotter-than-expected wholesale prices data and could inform the Federal Reserve’s next monetary policy decision and thereby influence whether the central bank will hike interest rates higher or not.
Minutes from the Fed’s last meeting in September were released Wednesday and indicated that officials expect restrictive policies to remain in place until they are sure inflation is headed back down toward the 2% target range. Policymakers were however divided on whether further interest rate hikes will be needed to achieve this.
This difference in opinion has also been reflected in comments from Fed speakers in recent weeks, with some leaving the door to further rate hikes open while others indicated they believe rates have been raised sufficiently.
Several Fed officials are due to make remarks on Thursday which could provide fresh hints about the policy outlook and weekly initial jobless claims are due. Investors are also still monitoring developments in the Israel-Hamas war and its potential geopolitical and economic implications, including for the energy sector.
