- U.S. Treasury yields edged higher Thursday as bond trading resumed after the Veterans Day closure and investors looked ahead to fresh inflation and housing data for clues on the Federal Reserve’s next move, CNBC reported. The 10-year yield, the benchmark for mortgages, auto loans and credit-card rates, was up 2 basis points at 5.0100%.
- The 2-year yield, which is more sensitive to the Fed’s path, was 5 basis points higher at 4.7800%. The 30-year yield was steady at 5.3503%. That left a 23-basis-point 2s/10s spread, by our calculation, with the curve still modestly upward-sloping.
- Friday’s producer-price index is expected to show a 0.4% rise in October, down from a 1.3% surge in September. Before that, investors are watching October existing-home sales from the National Association of Realtors, due later Thursday. Sales rose 1.5% in September to 3.99 million, up from a two-year low, and are expected to reach 4 million, according to Trading Economics estimates cited by CNBC.
- Oil prices were broadly flat in early trading as Middle East negotiations remain deadlocked. West Texas Intermediate futures were up less than 0.1% at $86.59 a barrel, while Brent rose 0.17% to $92.92.
What Happened?
Cash Treasurys were shut Wednesday for Veterans Day, so Thursday is the first session in which the government-bond market can react to the Nvidia-led risk-off move in Wednesday night’s futures and to the still-hot inflation backdrop. A 5.01% 10-year yield keeps financial conditions tight for housing and consumer credit just as traders look for confirmation that October’s 0.4% CPI was not a one-off. The 2-year’s 5-basis-point rise shows the front end is still being pulled by rate-hike odds rather than by safe-haven bidding.
Why It Matters?
The modest size of the move matters as much as the direction. A 2-basis-point rise in the 10-year after a holiday shutdown is not a disorderly backup, but yields are starting from already high levels, and the 30-year holding at 5.35% leaves long-duration investors with little relief. If Friday’s PPI comes in at the expected 0.4%, it would cool from September’s 1.3% jump but would not, on its own, unwind the case for a December Fed hike that markets have been building since this week’s CPI report.
What’s Next?
The immediate catalysts are Thursday’s existing-home sales report and Friday’s PPI. Investors will watch whether the 10-year can stay above 5% and whether the 2-year keeps climbing if equity futures remain weak. Oil’s lack of a fresh move suggests the bond backup is about U.S. data and Fed pricing, not a new geopolitical shock in energy.
Affected Tickers and Coins: TLT, IEF, SHY, SPY
Source: CNBC
