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US Treasury yields rise after mixed consumer price index


US Treasury yields rise after mixed consumer price index

U.S. Treasury yields rose slightly on Wednesday as Wall Street assessed a mixed consumer price index report and its impact on the Federal Reserve’s interest rate decision next week.

The return on the 10-year government bonds was more than 2 basis points higher at 3.667%, with the 2-year government bonds The yield recently rose by 4 basis points to 3.646%.

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

Consumer prices rose 0.2%, in line with expectations for August, but the monthly core inflation rate was slightly higher than expected. Excluding food and energy prices, the consumer price index rose 0.3%, versus a Dow Jones estimate of 0.2%. Year-on-year, the figure rose 3.2%, in line with estimates.

The report comes ahead of the Fed’s September 17-18 meeting, when traders widely expect a rate cut. The only remaining question seems to be how much the US central bank will cut rates.

Some economists are calling for the Fed to cut interest rates by half a percentage point next week. They accuse the central bank of having gone “too far and too fast” in tightening its monetary policy in the past.

Others called such a move “very dangerous” for the markets and instead urged the Fed to cut interest rates by a quarter of a percentage point.

According to CME Group’s FedWatch tool, traders are currently calculating an 83 percent probability of a 25 basis point rate cut, with 17 percent expecting a 50 basis point cut.

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