US Treasury yields fell on Thursday as investors moved towards safer investments. Treasury prices rose as investors sold some technology stocks and moved their money into US government bonds. Investors were also waiting for more economic data, including inflation figures, to understand the direction of the US economy.
The report was released by the US Bureau of Labor Statistics. The September Consumer Price Index (CPI), which measures changes in the prices of goods and services across the US economy, came in higher than economists had expected. Investors were assessing the latest US inflation report released on Wednesday.
Gasoline prices increased 9.1% and accounted for half of the rise in overall CPI. The broader energy index also jumped 5.2%. Deutsche Bank analysts said the probability of a rate increase reached an intraday peak of 58% after the inflation figures were released. They added that the probability remained above 50% for around half an hour, as quoted by CNBC.
Because energy prices had risen sharply, the report was expected to show strong inflation partly. Higher gasoline prices played a major role in September’s inflation increase. These included the Producer Price Index (PPI), September retail sales figures and weekly initial jobless claims. The inflation report has increased attention on the Federal Reserve’s next interest rate decision. The central bank’s next policy meeting was only two weeks away. Higher-than-expected inflation raised concerns that the Fed might increase interest rates instead of keeping them unchanged. Expectations of a Fed rate hike rose sharply after the CPI report.
PPI measures changes in prices received by producers, retail sales provide information about consumer spending, and initial jobless claims show how many people filed for unemployment benefits for the first time, according to CNBC. Investors were waiting for more US economic reports later on Thursday.
