U.S. Treasury yields ticked greater Thursday after new U.S. data pointed to persistent wholesale inflation.
The 2-year Treasury yield climbed 4 foundation factors to three.73%. The benchmark 10-year note yield added practically 5 foundation factors to 4.285%.
One foundation level is the same as 0.01%, and yields and costs transfer in reverse instructions.
The producer value index, a measure of wholesale U.S. inflation, climbed 0.9% in July on a month-over-month basis. Economists polled by Dow Jones anticipated PPI to extend 0.2% month over month.
That report throws chilly water on one other inflation report that got here out earlier within the week indicating some softening in consumer prices. The July shopper value index eased issues that tariffs could also be inflicting costs to extend quickly.
Despite the upper inflation quantity, fed funds futures had been nonetheless pricing in about 93% odds of a fee lower in September, based on the CME’s FedWatch Tool. This was solely barely decrease from the day prior. The futures, nevertheless, did take away any likelihood of a half-point lower.
Those inflation readings come forward of the Fed’s annual gathering of the world’s central bankers in Jackson Hole, Wyoming, from Aug. 21-23, sponsored by the Kansas City Fed, which is able to affect future financial coverage choices.
“Next week the Kansas City Fed are hosting their annual economic policy symposium in Jackson Hole in Wyoming, which has historically often been used for the Fed to signal policy shifts,” Deutsche Bank analysts stated in a word.
“It was last year that Chair Powell said that the ‘time has come for policy to adjust,’ just weeks before they cut rates for the first time since the pandemic. So all eyes will be on that conference for any fresh signals on the likelihood of rate cuts,” they added.