NEW YORK, Sept 15 (Reuters) – U.S. Treasury yields rose on Friday, with two-year Treasury yields above the 5 percent threshold, as futures forecast higher interest rates for an extended period ahead of the Federal Reserve’s policy meeting next week predict.
* The two-year bond yield, which reflects interest rate expectations, rose 1 basis point to 5.024%, while the benchmark 10-year bond yield rose 2.4 basis points to 4.314%.
* The market ignored consumer and producer price data released on Wednesday and Thursday that showed gasoline prices rising more than 10% as underlying inflation slowed, although still double the Fed’s target 2%.
* “The market is in a bind,” said Gennadiy Goldberg of TD Securities in New York.
* “They know that given the typical business cycle, it is only a matter of time before the economy weakens from the impact of higher interest rates. But like the stock market, they have not yet seen a significant slowdown in consumption. Significantly,” he added.
* Futures forecast just a 3% chance the Fed will raise interest rates at the end of its two-day meeting on Wednesday. However, they also forecast that the target interest rate for overnight loans will remain above 5% through the end of July 2024, a sign that the company will stick to its “higher for longer” message.
* The two- to 10-year bond yield curve, which is seen as a harbinger of a recession if it inverts, traded at -71.2 basis points.
* The 30-year yield rose 1.7 basis points to 4.402%.
