Treasury yields extend climb to month high before inflation report
Treasury yields rose on Wednesday, with long-term yields around their highest since mid-July, as investors await a report on US consumer inflation which was high in the post-economic recovery phase. the COVID-19 pandemic.
What do yields do
The yield of the 10-year Treasury bill TMUBMUSD10Y,
was 1.369%, down from 1.342% by 3 p.m. EST Tuesday. Debt yields rise as prices fall.
30-year Treasury bond yields TMUBMUSD30Y,
2.012%, compared to 1.984% a day ago.
The 2-year Treasury bill TMUBMUSD02Y,
yielded 0.241%, against 0.236% on Tuesday.
On Tuesday, 10- and 30-year Treasury yields hit their highest yields since July 14, while 2-year yields hit their highest since July 13, according to Dow Jones Market Data.
What drives the market?
Economists polled by the Wall Street Journal expect the Labor Department to report that the U.S. consumer price index rose 5.3% in July from a year earlier. That’s just a notch below the June CPI reading of 5.4%, which showed the cost of living rose the most since 2008 as inflation spiked more widely in the US economy.
The so-called basic price index, excluding volatile food and energy products, probably increased by 4.4% from the previous year, compared to the 12-month rate in June which reached 4.5% and s ‘is established at a peak in 29 years.
The month-over-month CPI rate is expected to rise 0.5% in July, from 0.9% in June, and 0.4% excluding food and energy, compared to 0.9% also in June. last month. .
On Tuesday, the US Senate voted 69-30 Tuesday to approve the bipartisan infrastructure bill, a decision that returns the $ 1,000 billion measure to the House of Representatives for approval.
Investors may also be on the lookout for an inflation reading from the Atlanta Fed at 10 a.m., which provides its own monthly survey of inflation expectations for the coming year and the next. uncertainty of inflation.
Going forward, investors will expect an auction of $ 41 billion of 10-year notes at 1 p.m., which will be noticeable after the inflation readings.
Kansas City Federal Reserve Chairman Esther George is scheduled to speak at noon on Wednesday, while Atlanta Fed Chairman Raphael Bostic is scheduled to speak at 10:30 a.m.
What analysts say
“A consensus on analysts’ expectations suggests that US consumer prices could stabilize near the 5.4% level printed last month. But we don’t rule out the possibility of a sweet surprise impression, as oil prices, which account for more than half of the CPI rise, fell almost 20% during the month of July and rose. perhaps eased the upward pressure on consumer prices. last month ”, wrote Ipek Ozkardeskaya, senior analyst at Swissquote, in a daily research note.
“Still, the price trend for used vehicles is not certain, as bottlenecks in disrupted supply chains and the global shortage of chips may have kept prices high on the market. consumption, ”the analyst wrote.