Treasury Yields Slip on Inflation Data, Fed Rate Hike Odds Soar

US Treasury yields eased on Friday after the release of inflation data, but the week's numbers still indicate that the Federal Reserve may raise interest rates. The US 10-year Treasury yield dropped one basis point to 4.951%, but has gained over 16 basis points or 3.49% this week.

The recent inflation report was mostly in line with estimates, except for core CPI which was in line with forecasts but ticked lower. However, the red-hot PPI report a day ago and the surge in US yields this week have led to a Fed-hawkish repricing.

Money markets now price in a 91% chance of a 0.25% rate increase by the Federal Reserve at its next meeting. Meanwhile, US consumers are becoming pessimistic about the economy and expect higher prices due to rising fuel costs and trade tensions.