The 10-year Treasury yield edged up Thursday as investors digested a hotter-than-expected wholesale inflation reading.
The benchmark 10-year Treasury yield was up by more than a basis point at 4.281%. Meanwhile, the 2-year Treasury was a basis point lower at 4.143%.
One basis point is equal to 0.01% and yields and prices move in opposite directions.
The producer price index report released Thursday showed wholesale prices rise more than expected in November. The index rose 0.4% last month, ahead of the 0.2% expected by economists polled by Dow Jones. A jump in jobless claims data also signaled a potentially weakening economy, muting some of the gains in yields.
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Thursday's data dump comes after the consumer price index report for November published Wednesday showed a 12-month inflation rate of 2.7% and an increase of 0.3% on a monthly basis. Core inflation, which excludes food and energy prices, was at 3.3% on an annual basis and 0.3% monthly. These numbers were in line with the Dow Jones consensus estimates.
The data comes ahead of the Federal Reserve's final policy meeting next week where rate cut decisions will be made. There's a strong expectation that the Fed will cut rates further in the meeting, but skip a January cut as they measure the impact previous cuts have had on the economy.
Currently, traders are pricing in a nearly 99% chance of a quarter-point rate cut, according to the CME FedWatch tool.
Money Report
"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.
"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."
Fed officials will not be commenting ahead of the rate cut decision as they are currently in a blackout period which restricts them from speaking publicly before a central bank meeting.
