Treasury yields rise ahead of inflation data

  • August's consumer price index is due to be released at 8:30 a.m. ET, with a hotter reading expected.
  • There are no auctions scheduled to be held on Tuesday.

U.S. Treasury yields rose early on Tuesday, ahead of the release of closely watched inflation data later in the morning.

The yield on the benchmark 10-year Treasury note climbed nearly 2 basis points to 1.341% at 3:50 a.m. ET. The yield on the 30-year Treasury bond added 1 basis point at 1.917%. Yields move inversely to prices and 1 basis point is equal to 0.01%.

Treasurys

August's consumer price index is due to be released at 8:30 a.m. ET, with a hotter reading expected. The CPI is forecast to have risen 0.4% in August month on month and 5.4% year on year, according to a Dow Jones consensus estimate.

Inflation data is being closely watched by the Federal Reserve, as it considers when to start tightening monetary policy. The Fed is due to kick off its latest two-day policy meeting next Tuesday.

Steven Bell, chief economist at BMO GAM, said on Tuesday that he expected the Fed to confirm plans to start tapering bond purchases at the end of the year.

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He said this was now priced into markets, so expected attention to turn to when the Fed would start hiking interest rates, which depended on inflation and employment data.

"Figures out this week may show that inflation has cooled a bit in month-on-month terms but it remains well above the 2% target, it's employment that is holding the Fed back from pulling the trigger on a rate rise," Bell said.

Nonfarm payrolls grew by just 235,000 in August, well below expectations of 720,000 new positions.

There are no auctions scheduled to be held on Tuesday.

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