A trader works on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., Sept. 16, 2026.
Jeenah Moon | Reuters
Treasury yields dropped Thursday, as investors continued to cash in technology shares and fled to the safety of bonds following the latest wholesale inflation data.
The benchmark 10-year Treasury yield recently tumbled almost 13 basis points to 5.066%, as did the 30-year Treasury bond yield, to 5.40%. The 2-year Treasury note yield was down more than 6 basis points, to 4.74%.
One basis point equals to 0.01%, and yields and prices move in opposite directions.
Wholesale prices jumped at an annual rate of 6.3% in September, the biggest gain since 2022, according to the Bureau of Labor Statistics. Economists polled by Dow Jones were forecasting an advance of 5.5%.
The producer price report comes on the heels of the latest consumer price index released Wednesday that also came in hotter than expected. The measure of goods and services costs across the U.S. economy rose 0.6% monthly and 3.7% on an annual basis in September against the consensus forecast for gains of 0.6% and 3.6%, respectively.
Investors rotated into bonds amid a broader flight to safety, as growing fears of higher inflation and interest rates, and their effect on the AI spending boom, saw investors dump shares of high-flying technology companies.
The data did little to change interest rate expectations, with fed funds futures pricing in at least one more quarter-point raise by the end of the year, according to the CME FedWatch tool. The likelihood that rates will move higher than the current fed funds range of 3.75% to 4.00% has risen sharply over the past month.
"With a second day in a row of higher-than-expected inflation numbers, it seems the Fed will have no choice but to raise rates again this year," said Chris Zaccarelli, chief investment officer at Northlight Asset Management. "While we don't expect them to raise rates later this month (because it is so close to the mid-term election), we do think that they will increase the Fed Funds rate another [quarter point] in December."
Last month, the U.S. central bank raised benchmark lending rates for the first time this year, lifting fed funds from their prior range of 3.50% to 3.75%.
Correction: A previous version of this article misstated how traders are pricing the Fed's next interest rate decision.