The 10-year Treasury yield rose above 5% on Thursday as oil prices climbed and investors expected further Federal Reserve hikes. Traders price in 100% odds of an increase in December after Tuesday's hotter-than-expected consumer price index reading.
The 10-year Treasury yield rose 3.1 basis points to 5.02% on Thursday, after earlier hitting 5.0583%, the highest since Oct. 22. The note is the benchmark for mortgages, auto loans and credit card debt.
The 2-year yield jumped 7 basis points to 4.797%. That maturity is more sensitive to short-term Fed interest rate decisions. The 30-year bond yield added 1.4 basis points to 5.363%.
Oil climbs after Trump's Iran comments
Oil prices moved higher after President Donald Trump said "we don’t need a deal with Iran," which raised concern that the war in the Middle East will continue indefinitely. West Texas Intermediate futures gained 0.4% to $86.86 a barrel, while Brent crude was ahead about 1% at $93.60 per barrel.
Hot CPI fuels expectations of more Fed hikes
Tuesday's hotter-than-expected consumer price index reading has investors anticipating more rate increases from the Fed. Goldman Sachs added a hike to its forecast on Wednesday, and now expects an additional quarter percentage point increase in March.
Traders are pricing in 100% odds of an increase in December, according to CME Group's FedWatch tool. The chance of a half percentage point increase stands at about 13%.
Inflation and housing data on deck
Another inflation report is due Friday. The October producer price index, which tracks wholesale prices, is expected to show a 0.4% rise, down from the 1.3% surge in September.
Investors also look to October's home sales report from the National Association of Realtors on Thursday. Existing home sales rose 1.5% in September to 3.99 million, and they are expected to have reached 4 million last month, according to Trading Economics estimates.
Source: CNBC
Trading involves risk.
Risk Disclaimer
