Bond Yields Rise as Solid U.S. Economic Data Continues

What’s Happening

• The yield on the 2-year Treasury BX:TMUBMUSD02Y rose by 3.8 basis points to reach 5.05%. Yields move in the opposite direction to prices.
• The yield on the 10-year Treasury BX:TMUBMUSD10Y increased by 2.2 basis points, reaching 4.32%.
• The yield on the 30-year Treasury BX:TMUBMUSD30Y also rose by 1.8 basis points to 4.4%.

What’s Driving Markets

• Thursday’s reports revealed a stronger-than-expected rise in retail sales, mainly due to gasoline sales. Additionally, producer price data matched expectations. Mizuho economists suggest that inflation-adjusted consumption is currently running at a 3.5% annual rate, indicating the likelihood of third-quarter GDP exceeding 2.5%.
• On Friday, the economic calendar includes the release of the Empire State manufacturing index, industrial production data, and the preliminary numbers from the University of Michigan’s consumer sentiment index.
• Furthermore, the United Auto Workers’ strike, which has commenced at major U.S. auto plants, may raise concerns about wage growth and its potential impact on inflation.
• Looking ahead, the Federal Open Market Committee decision next week will be crucial. Although a rate hike is highly unlikely, the central bank will update its economic and rate forecasts.