U.S. Treasury yields edged up Thursday as investors digested a hotter-than-expected wholesale inflation reading.
The benchmark 10-year Treasury yield was up by more than 3 basis points at 4.304%. Meanwhile, the 2-year Treasury rose more than 2 basis points to 4.18%.
One basis point is equal to 0.01% and yields and prices move in opposite directions.
Investors are awaiting further economic data on Thursday, with the producer price index report for November expected to be published in the morning. Economists polled by Dow Jones are expecting to see a 0.2% increase on a monthly basis. The weekly jobless claims report is also due.
This comes after the consumer price index report for November was published by the Bureau of Labor Statistics on Wednesday and showed a 12-month inflation rate of 2.7% and an increase of 0.3% on a monthly basis.
Core inflation, which excludes food and energy prices, was at 3.3% on an annual basis and 0.3% monthly. These numbers were in line with the Dow Jones consensus estimates.
The data comes ahead of the Federal Reserve's final policy meeting next week where rate cut decisions will be made. There's a strong expectation that the Fed will cut rates further in the meeting, but skip a January cut as they measure the impact previous cuts have had on the economy.
Money Report
Currently, traders are pricing in a nearly 99% chance of a quarter-point rate cut, according to the CME FedWatch tool.
"In-line core inflation clears the way for a rate cut at next week's [Federal Open Market Committee] meeting," said Whitney Watson, global co-head and co-chief investment officer for fixed income at Goldman Sachs Asset Management.
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"Following today's data the Fed will depart for the holiday break still confident in the disinflation process and we think it remains on course for further gradual easing in the new year."
Fed officials will not be commenting ahead of the rate cut decision as they are currently in a blackout period which restricts them from speaking publicly before a central bank meeting.
