The yield on the US 10-year Treasury note hovered around 4.95% on Friday, slightly below Thursday’s level but still near its highs for 2023. Investors digested the latest CPI data, which showed core CPI rising more than expected, up 0.3% month-on-month versus 0.2% in July and above the 0.2% consensus forecast. On an annual basis, core inflation eased to 2.4%, its lowest level since 2021, while headline CPI increased 0.4% as expected, keeping the annual rate at 3.4%.
After the release, the implied probability of a Fed rate hike next week climbed to about 90%, from roughly 70% beforehand, as the stronger-than-expected monthly core CPI figure reinforced expectations of further monetary tightening. At the same time, the Treasury Department’s latest buyback operation came in weaker than anticipated: the government repurchased $5.2 billion in bonds, below the $6 billion cap and roughly half of the $10.5 billion offered.
