The yield on the U.S. 10-year Treasury note climbed to 3.99% on Thursday, marking its first rise of the week as investors turned their attention to the upcoming Consumer Price Index (CPI) data and a new round of Treasury note auctions.
According to the U.S. Treasury Department, the government plans to auction $69 billion in two-year notes, $70 billion in five-year notes, and $44 billion in seven-year notes this month. Results for the two-year and five-year note auctions are expected Monday, while the seven-year auction results are due Tuesday.
Last month’s similar auctions drew weaker-than-expected demand, prompting close market scrutiny of this round’s performance. However, the Treasury’s $13 billion sale of 20-year bonds earlier this week attracted above-average investor interest, suggesting renewed confidence in the market.
Despite ongoing uncertainty from the U.S. government shutdown, the CPI report is still scheduled for release on Friday. Economists forecast that headline inflation will accelerate for the second consecutive month in September, potentially hitting its highest level since May 2024. Core inflation, however, is expected to remain stable, indicating that tariff-related price pressures remain contained.
Inflation’s persistence has stalled progress toward the Federal Reserve’s 2% target for over a year, with headline CPI readings fluctuating between 2.3% and 3.0% year-on-year. Nevertheless, markets continue to anticipate an eventual rate cut, even without stronger labour market data.
Meanwhile, the U.S. dollar traded narrowly against major G10 currencies as geopolitical tensions escalated. New sanctions imposed by the U.S. and European Union on Russia’s top oil producers — Rosneft PJSC and Lukoil PJSC — are expected to disrupt exports to China and India, which may reduce global supply in the coming weeks.
