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Bond Report: 10-year Treasury yield approaches 2%, as U.S. consumer prices rise to fresh 40-year high

Treasury yields were rising Thursday morning after the rate of U.S. inflation rose again in February to 7.9%—a fresh 40-year high, amid the Russian invasion of Ukraine.

Meanwhile, the European Central Bank was seen as being more hawkish than expected in its policy decision at its monthly meeting.

What are yields doing?

The 10-year Treasury yields
TMUBMUSD10Y,
2.007%

climbed 4.5 basis point to around 2%, from 1.946% at 3 p.m. Eastern Time on Wednesday.

The 2-year Treasury note 
TMUBMUSD02Y,
1.722%

 rate was at 1.727%, up 5.1 basis points from 1.676% a day ago. Wednesday’s finish for the short-term note marked the highest since Nov. 7, 2019.

The 30-year Treasury bond yield 
TMUBMUSD30Y,
2.378%

rose 5.9 basis points to 2.360%.

The spread between the 2-year and 10-year notes, known as the yield curve, stands at around 26 basis points. The shape of the yield curve is viewed as an indicator of possible recession.

What’s driving the market?

Repeating Wednesday’s action, investors sold bonds, which lifted yields as the consumer-price index rose 0.8% in the month, spurred by the higher cost of gasoline, food and housing, the government said Thursday.

The increase surpassed Wall Street’s forecast of a 0.7% gain and the surge in the cost of living in the past 12 months is the biggest since January 1982.

Meanwhile, weekly U.S. jobless benefit claims edged up 11,000 to 227,000.

Investors also juggled concerns about the global economic impact of Russia’s invasion of Ukraine.

Selling increased after the European Central Bank said that it would leave its key deposit rate unchanged at -0.5%, but also wind down its asset purchase program at a faster pace.

Uncredited

U.S. stocks
ES00,
-0.80%

point to losses ahead Thursday, a day after a large market rally, as high-level talks in Turkey between Russia and Ukraine failed to make progress on a 24-hour cease-fire to help evacuate civilians in an ever-worsening conflict. Hopes ahead of those talks had rallied stocks and helped send yields higher.

And oil prices
CL00,
+1.57%

CL.1,
+1.59%

CLJ22,
+1.55%

were again swinging higher, after a selloff Wednesday, as investors awaited an update on U.S. consumer price inflation. The February CPI is expected to have hit a fresh four-decade high when data is released at 8:30 a.m. Eastern Time.

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