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10-year Treasury yield jumps back above 4% after CPI tops expectations

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Treasury yields rose on Thursday as investors reacted to a hotter than expected rise in consumer prices.

The yield on the 2-year Treasury note jumped 15 basis points to 4.44% shortly after 8:30 a.m. The 10-year Treasury yield rose eight basis points to 3.985% and briefly topped 4% after the inflation report was released.

Yields and prices move in opposite directions. One basis point equals 0.01%.

Treasurys

The consumer price index rose 0.4% in September, above the 0.3% expected by economists according to Dow Jones. On a year over year basis, inflation was up 8.2%.

Core CPI, which strips out food and energy, was up 0.6% month over month, also higher than expected.

Markets are looking at the data for hints about future Federal Reserve policy, as some investors fear rates are being hiked too quickly and the central bank is dragging the U.S. economy into a recession.

Fed speakers have struck a hawkish tone ahead of their next meeting on Nov. 1 and 2 and have said they are not satisfied with recent inflation figures. Analysts are therefore broadly expecting another 75 basis point hike to be implemented next month.

The consumer prices report follows Wednesday’s stronger-than-expected producer price index inflation reading. Headline PPI, which reflects the wholesale price of goods, increased by 0.4%, rather than the 0.2% predicted by Dow Jones’ economists survey.

What Cramer is watching Thursday — hot inflation slams stocks, sends bond yields soaring

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