10-year Treasury yield holds steady near 4.1%, with next major inflation report ahead

Treasury yields were little changed Monday morning as traders looked ahead to the January consumer-price-index report, due this week.

What’s happening

  • The yield on the 2-year Treasury
    was 4.468%, down 1.8 basis points from 4.486% on Friday. Yields move in the opposite direction to prices.

  • The yield on the 10-year Treasury
    was 4.157%, down 2.9 basis points from 4.186% on Friday.

  • The yield on the 30-year Treasury
    was 4.367%, down 1.3 basis points from 4.380% on Friday.

What’s driving markets

Traders are awaiting the next major U.S. inflation report on Tuesday, which is expected to show the annual headline rate of the consumer-price index falling below 3% for the first time in almost three years.

Read: The first big inflation report of 2024 is coming out. Here’s what the CPI is likely to show.

Analysts expect Tuesday’s CPI report to be good enough to provide further evidence of continued improvement on inflation — although there’s an undercurrent of worry about shipping costs and fuel prices, which are no longer declining.

Minor revisions, released on Friday, to past CPI reports have helped reinforce investors’ optimism about the economy. Yields on 10- and 30-year Treasurys rose by more than 15 basis points for last week, the biggest weekly advances since the period that ended on Jan. 19. Two- and 10-year yields ended Friday at their highest levels since December.

What analysts are saying

“The January Consumer Price Index (CPI) report should show ongoing progress on inflation,” U.S. economists Stephen Juneau and Michael Gapen at BofA Securities wrote in a note.

“We forecast headline and core CPI rose by 0.2% [month over month] (0.16% unrounded) and 0.3% (0.29% unrounded) respectively. As a result, [year-over-year] headline inflation should print five-tenths lower at 2.9%, and core should print one-tenth lower at 3.8%,” they said.

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