US Treasury yields jump on Nov 10 after hot October inflation; 2-year at 4.73%

Short- and medium-term Treasury yields rose the most

The Federal Reserve's H.15 release of selected interest rates shows Treasury closing yields for Tuesday, Nov 10. That was the day hot October consumer price index (CPI) data came out. The CPI tracks prices that consumers pay. Treasury yields are the rates the US government pays to borrow, and many other loan rates follow them. Changes are in basis points (bp), or hundredths of a percentage point.

• 1-year: up 18bp to 4.56%
• 2-year: up 17bp to 4.73%
• 3-year: up 16bp to 4.74%
• 5-year: up 14bp to 4.81%
• 10-year: up 10bp to 4.98%
• 20-year: up 10bp to 5.39%
• 30-year: up 9bp to 5.35%

The gap between the 10-year and 2-year yields narrowed to about 25bp from 32bp. The 10-year is still below its Oct 21 level of 5.13%. The 2-year is back near its late-October range of 4.70–4.81%.

Real yields drove the move, not inflation expectations

Inflation-indexed yields measure the return after inflation. The 5-year rose 14bp to 2.56%, and the 10-year rose 12bp to 2.78%. Breakeven inflation rates hardly moved. These are the gap between ordinary and inflation-indexed yields, and they show expected inflation. The 5-year stayed at about 2.25%, and the 10-year was about 2.20%. This points to markets expecting the Fed to set tighter policy, not to higher long-run inflation.

Bill yields point to rate hikes from December

The 3-month yield rose 6bp to 4.30%, and the 6-month rose 12bp to 4.38%. The 1-month yield was steady at 4.05%. Markets are pricing in rate hikes from December onward, not before.

Policy-linked rates were unchanged

The effective federal funds rate, the average overnight rate banks charge each other, was 3.88% for a fourth straight week. The primary credit (discount) rate was 4.00%, and banks' prime rate was 7.00%. These levels fit a 3.75–4.00% target range. There is no Nov 11 Treasury data because the bond market was closed for Veterans Day.