U.S. Treasury yields have risen to their highest level in five weeks after new data showed that inflation rose in the United Kingdom and Canada, dampening expectations for interest rate cuts.
The yield on the benchmark 10-year Treasury has risen to 4.057%, while the yield on the two-year Treasury is now up to 4.279%.
The long dated 30-year Treasury has seen its yield increase to 4.275%.
The 10-year Treasury yield is now at its highest level in five weeks. The rise comes after U.S. Federal Reserve Governor Christopher Waller said that the central bank will likely cut rates this year, but that it does not feel “rushed” to do so.
At the same time, inflation in the U.K. unexpectedly rose to 4% in December, adding to concerns that central banks around the world may need to keep rates higher for longer.
Similarly, data out of Canada showed that inflation increased to 3.4% in December following a reading of 3.1% in November, largely due to energy price fluctuations.
Futures traders continue to scale back their expectations regarding the timing of interest rate cuts. In the U.S., markets now see a 63% chance of a rate cut in March this year, down from 81% on Jan. 12.
Later today (Jan. 17), December retail sales for the U.S. will be released, providing the latest indication of how consumer spending is holding up in America.
The U.S. economy has remained strong and resilient, further complicating the potential timing of interest rate cuts, and helping to send bond yields higher.
