The 10-year Treasury yield edged up Thursday as investors weighed a hotter-than-expected November wholesale inflation reading.
The benchmark 10-year Treasury note yielded 4.334%, up more than six basis points. The 2-year Treasury was more than four basis points higher at 4.199%. Yields and prices move in opposite directions, and one basis point is equal to 0.01%.
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The producer price index report released Thursday showed wholesale prices rose 0.4% in November, twice the 0.2% expected by economists polled by Dow Jones. At the same time, a jump in jobless claims data signaled a potentially weaker economy, muting some of the gain in yields.
The pair of reports came one day after November's consumer price index report published Wednesday showed a 12-month inflation rate of 2.7% and a 0.3% monthly increase. Core inflation, which excludes food and energy prices, was at 3.3% on an annual basis and 0.3% monthly. All the numbers were in line with the Dow Jones consensus estimates.
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The inflation updates were the last data Federal Reserve policymakers will see before their final meeting of the year next week, where a third interest rate reduction is expected. Markets are generally forecasting that the Fed will skip a January cut as central bank officials measure the impact that previous cuts have had on the economy.
Currently, traders are pricing in a near certainty that the benchmark fed funds rates will fall another quarter-point next week, according to the CME FedWatch Tool.
"It seems like it was a confirmation that we're on track for next week for the Fed to cut rates," Tom Hainlin, senior investment strategist at U.S. Bank Asset Management, said to CNBC. "We still think that 4.25% [to] 4.30% ... is still within the ballpark of what we think the [10-year] Treasury yield should be, given what we know about fiscal spend, given what we know about inflation expectations and fed fund expectations."
Money Report
Fed officials won't weigh in on this week's inflation data, as a blackout period restricts them from speaking publicly in the days leading up to a central bank meeting.
