Overview
- U.S. Treasury yields edged up Friday as investors processed the data, with the 10-year at about 4.145%, the 2-year near 3.47%, and the 30-year around 4.83%.
- Thursday’s release showed headline CPI rising 2.7% year over year and core CPI at 2.6%, marking the slowest headline pace since early 2021.
- Bonds initially rallied on the weaker readings, pulling the 2-year yield to roughly 3.46% and the 10-year to about 4.11% before reversing part of the move.
- Interest-rate swaps implied roughly five basis points of January easing—about a 21% chance of a quarter-point cut—with a reduction fully priced by mid-2026 and at least two cuts expected next year.
- CME FedWatch put the probability of a March rate cut at 56.8%, following the Fed’s third straight quarter-point reduction last week and ongoing debate within the committee.