Key insights
- Treasury yields are rising ahead of key inflation data. CPI is expected to increase, driven by energy prices, potentially leading to a more hawkish Fed stance. Higher inflation and yields could pressure equity valuations, especially if the Fed remains divided on policy.
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U.S. Treasury yields rose again on Tuesday as traders await key inflation data due later.
The 10-year Treasury yield — the benchmark for U.S. government borrowing — increased by 1 basis point to 4.4306%.
The yield on the 2-year Treasury note, which typically tracks short-term interest rate decisions by the Federal Reserve, was more than 2 basis points higher, at 3.9705%. The 30-year Treasury yield rose by more than 1 basis point to reach more than 5%.
One basis point equals 0.01%, or 1/100th of 1%, and yields and prices move inversely to one another.
As oil topped $100 a barrel in early dealmaking — with U.S. West Texas Intermediate futures rising 2.5% to $100.45 — investor attention will turn to April's consumer price index report, due at 8:30 a.m. E.T.
Non-seasonally adjusted year-over-year inflation is expected to increase to 3.7%, according to consensus estimates, its highest print since September 2023, on the back of the energy price shock caused by the ongoing conflict in the Middle East. Inflation rose 0.9% in March to 3.3%, the biggest monthly jump since June 2022.
Meanwhile, annual core inflation, which excludes food and energy, is expected to rise to 2.7%, up from 2.6% in March.
The inflation spike comes as Kevin Warsh, the incoming Federal Reserve Chair, faces a Federal Open Market Committee at its most divided in more than 30 years. The Fed's benchmark overnight rate has held steady between 3.5%-3.75% since December.
Elsewhere, U.S. private employers added an average of 39,250 jobs per week in the four weeks ending April 11 — slightly below the downwardly revised average weekly increase of 40,250 in the previous period, according to payrolls processing firm ADP.