Treasury yields drop amid hawkish Fed bets

After reversing two days of losses on Thursday, Treasury yields were falling on Friday. The 30-year bond’s yield decreased to the 4.782% zone, while the 10-year bond’s yield decreased to 4.632%. After declining earlier in the week, both yields increased on Thursday.

Investors are intently monitoring Treasury yields after they reached highs earlier this month that had not been seen since 2007. As investors analyzed this week’s economic data; particularly the PPI and CPI recent readings, and considered what it might mean for the Federal Reserve’s next interest rate decisions.

At 4.619%, the yield on the 10-year Treasury had decreased by more than 9 basis points. At 5.045%, the 2-year Treasury yield was over 3 basis points lower. Prices and yields are inversely correlated. 0.01% is one basis point.

Following statements made by Fed officials and the most recent inflation figures, investors considered the future for interest rates. Patrick Harker, president of the Philadelphia Federal Reserve, stated earlier on Friday that he believes the government can “hold rates where they are.”

When it was released on Thursday, the consumer price index for September came in at 0.4% on a monthly basis and 3.7% on an annual basis, somewhat higher than expected. Previous economists polled by Dow Jones predicted gains of 0.3% and 3.6%, respectively.

Earlier in the week, the September producer price index, which measures movements in wholesale prices, had also exceeded forecasts. As policymakers appear to have divergent opinions on whether interest rates ought to be raised much higher, there has been growing doubt regarding the Fed’s monetary policy plans in recent weeks.

Treasury yields were predicted to decrease in news sources on Thursday. This does not imply that the value of equities and corporate bonds will rise. Last Thursday, 10-year Treasury yields hit a 16-year high. iStockphoto and Getty Images

Long-term Treasury yields are likely to decline by the end of the year, but this may not be enough to keep stocks and corporate bonds climbing.

Despite a recovery on Thursday, the 10-year and 30-year Treasury rates have declined from their 16-year highs hit last week. The 10-year Treasury yield increased by 9 basis points on Thursday to be about 4.654%, and the 30-year Treasury rate increased by 8.7 basis points to be around 4.785%.