10-Year Yield Drops to 5% After Hotter-Than-Expected PPI — SkimNews
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- U.S. Treasury yields dropped sharply after a hotter-than-expected PPI inflation report, with the 10-year yield falling 2.5% to just above 5% and the 30-year yield declining 2.4% to below 5.4%.
- iShares 20+ Year Treasury Bond ETF (TLT) rose 2% in pre-market trading, extending its rebound from recent lows to 5%.
- CME FedWatch now shows a 34% probability of a 25-basis-point rate hike at the Fed's Oct. 28 meeting.
- The 10-year and 30-year yields both crossed key technical thresholds — 5% and 5.4% respectively — in the same session following the inflation surprise.
Why it matters: Yields falling on hotter-than-expected inflation is counterintuitive and suggests bond investors are reading the PPI as noise rather than a signal of Fed tightening. With markets pricing just a 34% chance of a 25bp hike at the Oct. 28 meeting, traders appear to be betting the Fed will look past the print — a stance that directly affects borrowing costs across mortgages, corporate debt, and government financing.
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