Bond yields rose on Wednesday after stubbornly high U.K. inflation data reminded investors that central banks remained on course to raise borrowing costs further.
- The yield on the 2-year Treasury TMUBMUSD02Y, 4.520% gained 4.7 basis points to 4.490%. Yields move in the opposite direction to prices.
- The yield on the 10-year Treasury TMUBMUSD10Y, 4.081% rose 5.7 basis points to 4.068%.
- The yield on the 30-year Treasury TMUBMUSD30Y, 4.078% climbed 3.7 basis points to 4.067%.
What’s driving markets
Treasury prices moved lower, tracking falls in the U.K. equivalent gilt TMBMKGB-10Y, 4.010%, after data showed Britain’s inflation moving back up to a 40-year high of 10.1%.
The faster-than-expected British consumer price rises reminded investors that central banks in most major economies will continue to battle inflation by hiking borrowing costs.
“Higher global bond yields are a byproduct of the December Gilt future trading down after strong UK CPI,” said Stephen Innes, managing partner at SPI Asset Management.
The benchmark 10-year Treasury yield moved further above the psychologically significant 4% mark as markets priced in a 94.7% probability that the Fed will raise interest rates by another 75 basis points to a range of 3.75% to 4.00% after its meeting on November 2nd.
The central bank is expected to take its Fed funds rate target to 4.9% by April 2023, according to the CME FedWatch tool.
U.S. economic updates set for release on Wednesday include September building permits and housing starts at 8:30 a.m. and the Federal Reserve’s Beige Book of anecdotes at 2 p.m. All times Eastern.
Minneapolis Fed President Neel Kashkari is due to speak at 1 p.m. and Chicago Fed President Charles Evans will deliver comments at 6:30 p.m.
The Treasury is due to sell $12 billion of 20-year bonds on Wednesday at 1 p.m..