Treasury yields edged higher on Tuesday morning as traders positioned ahead of the closely watched October consumer price index (CPI) data release [1]. The 2-year Treasury note yield climbed more than 6 basis points to 4.6136%, while 10-year Treasury yields rose 2 basis points to 4.882%, with the 30-year bond yield remaining broadly flat at 5.261% [1]. These movements reflect market anticipation of inflation data that could influence Federal Reserve policy decisions.
Economists polled by Reuters expect the October CPI print to show 0.3% month-on-month growth, down from 0.6% year-on-year growth in September, while core consumer prices—excluding food and energy—are anticipated to rise 0.2%, lower than the 0.3% increase recorded in September [1]. The CPI data, scheduled for release at 8:30 a.m. ET, is being closely monitored by traders seeking evidence that inflationary pressure on the U.S. economy is slowing [1].
The inflation data comes in the context of stronger-than-expected employment figures, with 165,000 jobs added in October, more than double Wall Street forecasts [1]. Markets have already largely priced in a 25 basis point interest rate hike in December, according to CME Group's FedWatch, suggesting that Tuesday's CPI data, along with wholesale inflation numbers due Friday, may shape the Federal Reserve's future interest rate decisions [1]. Additionally, oil prices dipped further on Tuesday, with Brent crude falling below $90 a barrel for the first time since August, partly attributed to President Donald Trump's comments that the war with Iran could end "fairly soon" [1].
CONCLUSION
Treasury yields are rising in anticipation of October CPI data that could provide crucial signals about inflation trends and influence Federal Reserve policy. The expected moderation in both headline and core inflation, combined with stronger employment data, creates uncertainty about the Fed's rate trajectory, with markets currently pricing in a December rate hike.