US bond traders are turning to the latest consumer price inflation figures and a planned appearance by Federal Reserve Chairman Kevin Warsh for clues on how quickly the central bank will keep raising interest rates. Treasury yields, which jumped sharply after the Fed's unanimous rate hike last month, held near a 24-year high last week as investors await new data.
A slowdown in job growth in this month's employment report helped restrain the bond selloff, leading traders to expect the Fed to hold steady at its next meeting in late October. They still anticipate a quarter-point increase in December, followed by two more by late 2027.
However, a larger-than-expected September CPI print could rekindle the selloff. "The risk to the CPI report is asymmetric," said Molly Brooks of TD Securities, noting a hotter print could push the Fed to tighten faster. Warsh will speak Thursday at the IMF annual meeting in Bangkok, Thailand, alongside governors Christopher Waller and Cleveland Fed President Beth Hammack.
Economists expect CPI to rise 0.6% month-over-month, with the headline rate at 3.6% year-over-year.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing