U.S. Treasury yields rose slightly, while market participants are preparing for the publication of the November consumer inflation report.
The yield on 5-year Treasury bonds increased by 1.4 basis points, reaching 4.111%, while the yield on 30-year bonds was 4.425% (+1.8 basis points). Meanwhile, the yield on 2-year Treasury bonds, reflecting expectations of short-term interest rates, increased by 1.7 basis points to 4.166%, while the yield on 10-year bonds increased to 4.236% (+1.5 basis points).
Investors awaited November’s CPI figures, which come the week before the last interest rate decision the year from the Fed. Economists predict that the overall CPI increased by 2.7% per annum after an increase of 2.6% per annum in October. The core CPI, which excludes food and energy prices, is projected to show growth of 3.3% per annum, which is in line with the pace of the previous two months. Meanwhile, the producer price index for November will be released tomorrow. These inflation data are among the last key economic releases before the Fed meeting next week. The Fed is set to announce its next interest rate decision as well as share guidance about the policy and economic outlook on Dec. 18. According to the CME FedWatch Tool, markets see an 86.1% probability of a 0.25% rate cut in December (compared to 78.1% a week ago), while the probability of an additional rate cut in January is 20.2%.