US yields climb as inflation data dashes hopes for large rate cut
Updates at 0920 ET
By Davide Barbuscia
NEW YORK, Sept 11 (Reuters) -U.S. Treasury yields rose on Wednesday after the release of August data showing U.S. consumer prices rose marginally while underlying inflation remained sticky, curbing expectations for a large interest rate cut by the Federal Reserve next week.
Excluding the volatile food and energy components, the Consumer Price Index climbed 0.3% in August after rising 0.2% in July. In the 12 months through August, the so-called core CPI increased 3.2%. That followed a 3.2% gain in July.
Treasury yields, which move inversely to prices, surged after the release, while traders pared back bets on a 50 basis point cut by the U.S. central bank at its Sept. 17-18 rate setting meeting.
Benchmark 10-year yields US10YT=RR were last at 3.663%, up from 3.644% on Tuesday. Two-year yields US2YT=RR, more reflective of expected changes in monetary policy, were at 3.651%, up about 4 basis points from Tuesday.
Traders now see just a 15% chance of a bigger half-point rate cut next week, down from about 29% before the report. Total rate cuts for the year were seen at about 106 basis points after the report, down from 113 basis points earlier.
"Core (CPI) at 0.3% is what's shaken up the market," said Tony Farren, managing director in rates sales and trading at Mischler Financial Group.
"This dampens the chances of a 50 basis point cut in September; I think that's definitely off the table now, and it hurts the chances for any 50 bps cut for the rest of the year, although we still have a lot of data after," he said.
The rise in yields on Wednesday followed large bond gains overnight, with yields touching fresh lows in over a year.
Some analysts said that was partly a reaction to the U.S. presidential debate on Tuesday evening. Vice President Kamala Harris, the Democratic candidate, was widely seen as dominating the debate with Republican former President Donald Trump, prompting betting markets to give her better odds in the November presidential election.
"Yields drifted slightly lower during the overnight session with a theme of stability emerging in the wake of the Harris/Trump debate," BMO Capital Markets rates strategists wrote in a note. "From the perspective of the US rates market, nothing emerged from the debate that triggered reflationary jitters or concerns about Treasury supply indigestion."
Harris' late entry in the presidential race after President Joe Biden's withdrawal in July prompted a reversal of bond trades that were put in place on expectations of a second Trump presidency. Those expectations had led to higher U.S. Treasury yields on anticipation of higher inflation and wider budget deficits under Trump.
On the supply side, later on Wednesday the Treasury will sell $39 billion in 10-year notes, which will be followed by a $22 billion 30-year bond auction on Thursday.
Reporting by Davide Barbuscia; Editing by Andrew Heavens and Jonathan Oatis
Dernières actualités
Avertissement : Les entités de XM Group proposent à notre plateforme de trading en ligne un service d'exécution uniquement, autorisant une personne à consulter et/ou à utiliser le contenu disponible sur ou via le site internet, qui n'a pas pour but de modifier ou d'élargir cette situation. De tels accès et utilisation sont toujours soumis aux : (i) Conditions générales ; (ii) Avertissements sur les risques et (iii) Avertissement complet. Un tel contenu n'est par conséquent fourni que pour information générale. En particulier, sachez que les contenus de notre plateforme de trading en ligne ne sont ni une sollicitation ni une offre de participation à toute transaction sur les marchés financiers. Le trading sur les marchés financiers implique un niveau significatif de risques pour votre capital.
Tout le matériel publié dans notre Centre de trading en ligne est destiné à des fins de formation / d'information uniquement et ne contient pas – et ne doit pas être considéré comme contenant – des conseils et recommandations en matière de finance, de fiscalité des investissements ou de trading, ou un enregistrement de nos prix de trading ou une offre, une sollicitation, une transaction à propos de tout instrument financier ou bien des promotions financières non sollicitées à votre égard.
Tout contenu tiers, de même que le contenu préparé par XM, tels que les opinions, actualités, études, analyses, prix, autres informations ou liens vers des sites tiers contenus sur ce site internet sont fournis "tels quels", comme commentaires généraux sur le marché et ne constituent pas des conseils en investissement. Dans la mesure où tout contenu est considéré comme de la recherche en investissement, vous devez noter et accepter que le contenu n'a pas été conçu ni préparé conformément aux exigences légales visant à promouvoir l'indépendance de la recherche en investissement et, en tant que tel, il serait considéré comme une communication marketing selon les lois et réglementations applicables. Veuillez vous assurer que vous avez lu et compris notre Avis sur la recherche en investissement non indépendante et notre avertissement sur les risques concernant les informations susdites, qui peuvent consultés ici.