Treasury yields edged higher on Friday as investor expectations for a December rate hike by the Federal Reserve gathered strength. The 10-year U.S. Treasury note yield, the key benchmark for mortgages, auto loans and credit card debt, rose 2 basis points to 5.1271%. The 30-year Treasury bond yield, which tends to react to geopolitical risks, was 3 basis points higher at 5.4602%, while the 2-year note yield, more sensitive to short-term Fed decisions, slipped 1 basis point to 4.8525%. The moves follow Thursday’s session, in which the 10-year yield jumped more than 13 basis points above 5% and the 2-year yield soared more than 15 basis points. According to CME Group’s FedWatch tool, traders price a 100% probability of a rate hike on December 9, with a 25 basis point increase at almost 87% and a 50 basis point increase at around 13%. Energy inflation remains in focus as oil is set for a second weekly decline, with the prospects of renewed U.S. strikes on Iran receding. December WTI futures fell 0.1% to $88.63 a barrel and Brent crude rose 0.3% to $96.11. October’s producer price index, a key measure of wholesale inflation, is due later Friday and is expected to show 0.4% growth, compared with 1.3% in September.
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