10-year Treasury yield is steady even after data showing highest inflation

The U.S. 10-year Treasury yield held steady Wednesday as investors pored through the latest data showing inflation last month at its highest in three years, though some pricing pressures weren’t as bad as feared.

The yield on the 10-year Treasury note — the main benchmark for mortgages, auto loans and credit card debt — was little changed at 4.534%.

Shorter- and longer-dated maturities were also little changed. The yield on the 2-year Treasury note, which closely tracks short-term Federal Reserve interest rate decisions, was unchanged at 4.131%.

The 30-year Treasury yield, which traditionally reacts more to geopolitical events, also stood still at 5.013%.

One basis point equals 0.01%, or 1/100th of 1%, and yields and prices move inversely to one another.

“With the [U.S. Treasury] curve having already absorbed significant repricing on both sides, the report may prompt a near-term pause in rate moves,” wrote Karen Manna, fixed income investment director at Federated Hermes. “Even so, the backdrop maintains some upward pressure on yields.”

Yields held where they were after the latest inflation data — while hot — came in as expected. The May consumer price index spiked to a seasonally adjusted 0.5% for the month, and 4.2% from a year ago, which was the fastest rate of price increases since 2023, according to the Bureau of Labor Statistics. Both numbers were in line with expectations from economists polled by Dow Jones.

Core inflation, which strips away volatile food and energy prices, added 0.2% for the month, softer than the 0.3% consensus estimate. It also rose 2.9% over the past year, in line with forecasts.

The hot inflation data comes right before Kevin Warsh leads his first Federal Reserve meeting as chair next week. Policymakers are set to convene June 16-17.

The Fed is expected to hold rates steady this month, but the recent spike in pricing pressures are adding to conviction that the next major move from the central bank will be a hike. Fed funds futures were last pricing in a quarter point raise at the December meeting, according to the CME FedWatch Tool.

May’s producer price inflation data is due out Thursday.

— CNBC’s Jeff Cox contributed to this report.