US 10-Year Treasury Note Rises Above 4%

The yield on the 10-year US Treasury pared its early decline to hover above 4% on Thursday, holding close to its highest level in nearly one month as the hotter-than-expected inflation print pushed back against recent calls for expedited rate cuts by the Federal Reserve. Headline inflation was at 3.4% in December, firmly above market estimates of 3.2% and rebounding from 3.1% in the earlier month, while the annual core rate eased less than expected to 3.9%. The data challenged the recent narrative that prices in the United States are disinflating at a rapid pace, strengthening the argument for hawks in the FOMC and taming market bets that the US central bank is set to start loosening monetary policy by the first quarter. Also pressuring bond demand, initial jobless claims fell to an over two-month low to back last week’s stronger-than-expected jobs report.

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