US 10-year treasury bond yields reach new 4-year highs at 2.91% amid higher US inflation

  • The US 10-year yield has reached a high of 2.91%, the highest level since January 2014.
  • The upward move comes as the US inflation report came out above expectations.

The US 10-year treasury yield reached a new high at 2.91%, breaking above the 2.90% level recorded on Monday. At current levels, the global benchmark is at the highest level since January 2014. The peak around that time was 3.03%. Yields above the 3.03% level were last seen in mid-2011.

Bonds are selling off in reaction to the higher than expected inflation report in the US. Core inflation came out at 1.8% against 1.7% that was expected and headline inflation was 2.1% in January, also above early projections that stood at 1.9%.

The rise in bond yields reflects expectations for a quicker pace of rate hikes. The US stock market initially opened lower but then recovered and is now in positive territory. The US dollar is selling off in reaction to stocks and is not following the lead of bonds.

The US will release a series of economic indicators on Thursday: the Producer Price Index (PPI), the Philadelphia and New York manufacturing indices and the weekly jobless claims report. The PPI report will provide further information on inflation. 

The technical picture

The next level to watch is 3%, which is a psychological level, and then 3.03% mentioned earlier. On the downside, the previous high of 2.90% is noteworthy. Further support awaits at 2.83% that was a swing low on Monday, and then 2.81 seen earlier today. Lower, 2.79 was a low point earlier in February and it is followed by 2.76%. 

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