FX.co ★ Treasury Yields Jump After Hot CPI Report

The yield on the US 10-year Treasury note jumped 9 bps to 5.3% on Wednesday, once again nearing levels last seen in early 2002, after the latest US inflation data came in hotter than expected. Although higher energy prices were the main catalyst, the figures also signaled broadly based inflationary pressures. Headline annual inflation accelerated to 3.7%, above the 3.6% forecast, while the annual core inflation rate inched up to 2.6%, surpassing expectations of 2.5%. Monthly core CPI inflation also exceeded projections of 0.3%. The report reinforced expectations of another Federal Reserve rate hike this month, with the implied probability rising to about 50%, up from around 22% prior to the release.