Treasury yields rise on China data, Fed rate hike speculation

Treasury yields in the US advanced in Asia after China reported a rise in inflation and ahead of the US advance retail sales release and Fed’s Yellen speech.

At the time of writing, the benchmark 10-year yield was trading three basis points at 1.766%. The 2-yr treasury yield, which mimics short-term rate hike expectations, advanced two basis points at 0.855%. The 30-yr yield rose to 2.501%.

China consumer price index (CPI) came-in higher-than-expected at 1.9%. Meanwhile, producer price index (PPI) rose for the first time in 55 months. The data pointed to robust economic activity, although yesterday’s trade data was disappointing.

Rise in the yields could also be attributed to increased odds of Fed rate hike in December. Fed’s Yellen, during her speech later today, is likely to talk about Dec being an appropriate month for rate hike.