Treasury Yields Rise Amid US CPI Data, Rate Hike Bets
Treasury yields dipped after US CPI data was released on Friday but still posted a weekly rise, amid bets on an interest rate hike from the Federal Reserve. The 10-year yield slipped one basis point to 4.951%, despite being up over 16 basis points or nearly 3.5% for the week.
The 30-year yield fell two basis points to 5.34%, touching its highest level since 2007, as oil-price strength and geopolitical tension drove up long-end yields. Market-based inflation expectations also moved higher: the five-year breakeven rate rose to 2.46% from 2.37%, while the 10-year increased to 2.4% from 2.35%.
Money markets are assigning a 91% probability of a 0.25% rate increase at next week's meeting, according to current pricing. The US Dollar Index held near 99.00, up just 0.05%. With these developments in mind, market strategists are advising traders to prepare for heightened volatility in the fixed-income market.