Traders work on the floor of the New York Stock Exchange on Nov. 22, 2024.
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 4.296%, up more than two basis points. The 2-year Treasury was less than one basis point higher at 4.159%. Yields and prices move in opposite directions, and one basis point is equal to 0.01%.
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 widely expected third interest rate reduction is expected. Markets are generally forecasting that the Fed will skip a January cut as they 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.
"In-line core inflation clears the way for a rate cut at next week's [Federal Open Market Committee] meeting," said Whitney Watson, global co-head and co-chief investment officer for fixed income at Goldman Sachs Asset Management.
Money Report
"Following today's data the Fed will depart for the holiday break still confident in the disinflation process and we think it remains on course for further gradual easing in the new year," Watson added.
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.
