Bond Report: Treasury yields hold steady as investors await a look at inflation expectations


Treasury yields were mixed Friday morning, with investors awaiting the University of Michigan’s latest consumer-confidence reading, which includes an update on inflation expectations.

What are yields doing?
  • The yield on the 10-year Treasury note

    edged up to 1.335%, compared with 1.331% at 3 p.m. Eastern on Thursday. Yields and debt prices move in opposite directions.
  • The 2-year Treasury note yield

    edged up to 0.226%, versus 0.217% on Thursday afternoon.
  • The 30-year Treasury bond yield

    edged down to 1.879% from 1.88% on Thursday.
What’s driving the market?

Yields rose slightly on Thursday after U.S. August retail sales showed an unexpected rise. Also, the Philadelphia Federal Reserve Bank’s activity index rose sharply in September, breaking a four-month streak of declines. Weekly claims for first-time unemployment benefits rose, partly reflecting the effect of Hurricane Ida, which made landfall in Louisiana in late August.

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Attention on Friday is expected to turn to the University of Michigan’s preliminary September consumer-confidence reading. A sharp drop in the August index didn’t slam the brakes on spending activity, as reflected in Thursday’s retail sales figures.

Economists surveyed by The Wall Street Journal, on average, are looking for the index to rise to 72.0 from last month’s 70.3. The data is due at 10 a.m. Eastern.

For Treasury investors, however, the focus will be on what the survey-based indicator says about inflation expectations.

What are analysts saying?

“Today, the main event for U.S. rates markets will be the survey of inflation expectations by the University of Michigan, especially on long-term inflation expectations (the last release in August came in at 2.9%),” wrote analysts at UniCredit. “If the survey continues to signal that consumers’ long-term inflation expectations remain anchored, this should continue to contribute to putting a cap on break-even rates in the U.S.”

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