US 10-Year Yield Jumps to Near-Month High After Hot Producer Prices

what happened

Long-term US government debt sold off on Friday after two sessions of sharp gains. The yield on the 10-year note, which moves opposite to its price, climbed 5.3 basis points to 5.156%, its highest level in nearly a month.

The move followed the Labor Department's October producer price report. Wholesale prices rose slightly less than forecast month on month, but the annual rate accelerated to 6.5%, the quickest pace since November 2022.

Traders now largely expect the Federal Reserve to lift rates by at least a quarter point next month, with a second quarter-point increase in January seen as more likely.

why it matters

Higher yields raise the discount rate applied to future earnings, while persistent input costs squeeze margins, so richly valued growth stocks face a tougher bar. Inflation is also spreading beyond energy, with food prices rising and services costs up for a fifth straight month. Chris Osmond of Fifth Third Wealth Advisors offered this view in the TradingView report.

market impact

US Treasuries: higher yields pressure bond prices; US stocks: higher discount rates weigh on expensive growth names

• ▼US Treasuries pressure down — rising yields mean falling prices for existing bonds
• ▼US stocks pressure down — higher discount rates and cost pressure weigh on expensive shares

tags

instruments