The yield on the 10-year US Treasury note climbed above 5.05% on Thursday, reaching a three-week high amid expectations that the Federal Reserve will deliver multiple interest rate increases in the current tightening cycle. CPI data released earlier in the week showed that both headline and core consumer prices rose more than forecast in October, suggesting that the energy price spike linked to the war in Iran is feeding through into broader segments of the economy.
In response, rate futures markets moved to price in a Fed rate hike in December, followed by two additional increases next year. At the same time, yields on intermediate-maturity Treasuries jumped after Jensen Huang resigned as president and CEO of Nvidia, stoking concerns about instability in the highly leveraged AI sector. Nvidia has been a key anchor and backstop for a substantial wave of AI-related corporate bond issuance, so an abrupt halt in the sector’s credit activity raised the risk of wider fixed-income selloffs as investors moved to raise cash.
