The yield on the US 10-year Treasury note climbed above 4.8% on Tuesday, its highest level since October 2023, as traders returned from the long weekend to a data-heavy week that could heavily influence expectations for the Federal Reserve’s next steps. Key inflation releases—CPI and PPI—are due this week and are expected to shed more light on underlying price pressures, particularly those tied to higher energy costs. Headline consumer inflation is projected to hold steady at 3.4%, while the core CPI rate is seen easing slightly to 2.4%. In contrast, both headline and core producer prices are forecast to accelerate, to 5.3% and 4.6%, respectively.
Oil prices have continued to move higher amid ongoing strikes in the Middle East, intensifying fears of supply disruptions. In interest-rate markets, futures are currently assigning roughly a 58% probability to a 25 basis point Fed rate increase at next week’s meeting. At the same time, a three-year Treasury sale on Tuesday marks the start of a busy slate of US government debt auctions.
