US Treasuries slumped after hotter-than-expected inflation prompted traders to boost their expectations that Federal Reserve officials raise interest rates later this month and next year. The declines drove yields higher across maturities, with yields on the two-year note up 12 basis points to 4.90%. Traders priced in a roughly coin-toss probability that the US central bank boosts rates at its October meeting.
The dollar surged to its highest level of the year. "We had that October hike in our forecast," Robert Sockin, PGIM's chief US economist, said on Bloomberg Television. "This opens the door more to it." The consumer price index rose 0.6% in September from a month earlier, according to Bureau of Labor Statistics data out Wednesday. On an annual basis, it advanced 3.7%. A key measure of underlying price pressures, excluding food and energy, rose 0.3% from the prior month and 2.6% from a year earlier.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing