The 10-year U.S. Treasury yield remained steady Wednesday as investors reviewed the latest data showing inflation last month at its highest level in three yearsalthough some price pressures have not been as severe as feared.
The yield on the Cash flow at 10 years rating – the main benchmark for mortgages, auto loans and credit card debt – was more than a basis point higher at 4.546%.
Shorter and longer maturities also changed little. The yield on the Cash flow over 2 years The rating, which closely tracks the Federal Reserve’s short-term interest rate decisions, rose less than 1 basis point to 4.133%.
THE Cash flow over 30 years the yield, which traditionally reacts more to geopolitical events, rose 2 basis points to 5.031%.
One basis point is 0.01%, or 1/100th of 1%, and yields and prices move inversely to each other.
Yields remained where they were after the latest inflation data – albeit hot – as expected. The May consumer price index rose to a seasonally adjusted 0.5% for the month and 4.2% from a year ago, representing the fastest rate of price increase since 2023, according to the Bureau of Labor Statistics. Both figures were in line with the expectations of economists surveyed by Dow Jones.
Core inflation, which strips out volatility in food and energy prices, rose 0.2% for the month, below the consensus estimate of 0.3%. It also rose 2.9% over the past year, in line with forecasts.
“Overall inflation remains elevated due to rising energy prices, but slowing inflation in the housing and services sector suggests underlying price pressures continue to moderate,” said Gargi Chaudhuri, chief investment and portfolio strategist for the Americas at BlackRock. “Even though stronger labor market data has reduced expectations for near-term rate cuts, we do not yet see evidence that rising energy costs are fueling broader core inflation.”
The hot inflation data comes just before Kevin Warsh leads his first Federal Reserve meeting as chairman next week. Policymakers are expected to meet on June 16 and 17.
The Fed is expected to keep rates steady this month, but the recent rise in price pressures reinforces the belief that the central bank’s next major move will be a hike. Fed funds futures were last up a quarter point at the December meeting, according to the CME FedWatch tool.
Producer price inflation data for May is due to be released on Thursday.
— CNBC’s Jeff Cox contributed to this report.
