US Treasury yields are surging

US Treasury yields reacted very naturally to Tuesday’s inflation data. Yields have soared since the release of the CPI data and through the US session. The 10-year US Treasury yield rose to 3.444%, compared to the last daily close at 3.385%.

The yields on these benchmark bonds fell to their lowest level in the current trading day at 3.294%, compared to the highest levels that recorded 3.456%. The US inflation data recorded mixed readings on Tuesday, indicating that the US consumer price continued to rise.

However, the annual reading of consumer prices fell to 8.3% compared to the July reading of 8.5%, but the reading was higher than the market expectations, which indicated 8.1%.

There is a direct relationship between the Fed rate hike and US Treasury yields, so the faster the rate hike, or at least the current pace, the more US Treasuries will surge further. Rising US inflation will consolidate expectations of further influential Fed’s rate hikes.