Treasury yields surge as inflation data points to tricky rates path for new Fed chair Warsh

U.S. Treasuries spiked on Friday morning as inflation signals continue to muddy investors’ expectations for interest rate trajectory under the new Federal Reserve chair Kevin Warsh.

The yield on the 10-year Treasury note — the main benchmark for U.S. borrowing — surged 7 basis points to 4.5358%.

Meanwhile, the 2-year Treasury note yield, which tends to react in line with short-term Fed rate decisions, was more than 6 basis points higher at 4.0603%.

The longer-dated 30-year Treasury bond yield was up more than 7 basis points to 5.0847%.

One basis point equals 0.01%, and yields and prices move inversely to each another.

The jump in yields comes as new Fed chair Warsh, who was confirmed by the Senate on Thursday, grapples with an increasingly complicated inflation picture. President Donald Trump continues to push for interest rate cuts, even as data on consumer prices and imports shows prices ticking higher.

The cost of imports rose by 1.9% for the month of April, and 4.2% on a 12-month basis, data published by the Bureau of Labor Statistics showed Thursday, as the conflict in the Middle East drives up energy prices, prompting importers to hike their costs.

Earlier in the week, BLS data showed that the consumer price index rose 3.8% year-on-year during March, with core inflation standing at 2.8%, above the Federal Reserve’s 2% target level.

Data releases expected later Friday include monthly industrial production data from the Federal Reserve, as well as the latest New York state manufacturing activity index for April.