10-Year Note Auction Clears at 5.30%; Inflation Expectations at 3.9%
A 10-year note auction priced at 5.30% on Oct. 7 vs 4.83% at the prior sale; consumer inflation expectations rose to 3.9%, above a 3.7% estimate.
The Treasury's 10-year note auction on Wednesday, Oct. 7, produced a high yield of 5.30%, compared with 4.83% at the previous auction. FRED data put the 10-year Treasury yield at 5.28% for the day and the 2-year at 4.77%, a 10-year/2-year spread of 0.51 percentage point, or 51 basis points. The effective federal funds rate was 3.88%.
Consumer inflation expectations for September rose to 3.9%, above an estimate of 3.7% and up from 3.6% the prior month. Consumer credit rose by $8.28 billion in August, short of the $15 billion estimate and below the $17.74 billion increase previously reported.
Housing-finance data showed the MBA 30-year mortgage rate at 7.49% for the week to Oct. 2, up from 7.30%. Mortgage applications fell 4.2%, after a 6% decline the week before, and the refinance index dropped to 515.8 from 557.8. Used car prices fell 1.1% month over month in September and were down 0.6% from a year earlier.
Risk measures were little changed in level terms. The VIX stood at 15.08 and the high-yield option-adjusted spread was 3.09%. The Fed's broad dollar index was 121.26, and the UUP dollar fund rose 0.48% to 29.04.
Inflation was a theme in the day's coverage: the Wall Street Journal published “What Six Years of Inflation Mean for the Midterms.” Fox Business aired a segment titled “This is ‘REVOLUTIONARY': Kevin Hassett touts economic growth under Trump.”
Data
| Release | Actual | Estimate | Previous |
|---|---|---|---|
| 10-Year Note Auction | 5.3% | n/a | 4.834% |
| Consumer Inflation Expectation (Sep) | 3.9% | 3.7% | 3.6% |
| Consumer Credit Change (Aug) | 8.28 B | 15 B | 17.74 B |
| MBA 30-Year Mortgage Rate (Oct/02) | 7.49% | 6% | 7.3% |
| MBA Mortgage Applications (Oct/02) | -4.2% | n/a | -6% |
| Used Car Prices YoY (Sep) | -0.6% | n/a | 0.4% |
Data: FMP, FRED. Figures are close-to-close unless stated.
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