By Harshit, Washington, D.C., 24 October, 2025 – 6:40 AM EDT
Treasury Yields Rise Ahead of Crucial CPI Data
U.S. Treasury yields inched higher on Friday as investors turned their attention to the long-delayed inflation report, a release expected to offer critical insight into the health of the American economy after weeks of uncertainty caused by the government shutdown.
The 10-year Treasury yield climbed more than 2 basis points to 4.012%, while the 2-year Treasury note yield rose 1 basis point to 3.497%. The 30-year Treasury bond increased by 2 basis points to 4.595%. Short-term maturities also ticked higher, with the 1-year yield reaching 3.623% and the 3-month yield at 3.901%.
A single basis point equals 0.01%, and Treasury yields move inversely to prices — meaning when yields rise, bond prices fall.
Market Focus Turns to Delayed CPI Report
At the center of market attention is the consumer price index (CPI) report, scheduled for release at 8:30 a.m. ET by the Bureau of Labor Statistics. The inflation data is expected to be particularly influential this time, given the lack of recent government data due to the ongoing shutdown.
Economists surveyed by Dow Jones expect the headline CPI to rise 0.4% for September, matching August’s increase. That would place the annual inflation rate at 3.1%, up slightly from the previous month’s 2.9%. The core CPI — which strips out volatile food and energy prices — is forecast to show a 0.3% monthly gain and a 3.1% annual rate, both unchanged from August.
Investors and policymakers alike will be watching for any sign that tariffs and supply-chain costs have begun feeding through to consumer prices. A hotter-than-expected reading could complicate the Federal Reserve’s next move on interest rates, while a cooling trend might bolster the case for further monetary easing.
Fed Policy Meeting Looms Large
The CPI release comes just days before the Federal Reserve’s October policy meeting, where central bank officials will decide whether to adjust interest rates again. Market expectations currently reflect an overwhelming 99% probability of a quarter-point rate cut, according to data from the CME FedWatch Tool.
Fed Chair Jerome Powell and other policymakers have signaled a cautious approach in recent weeks, emphasizing that decisions will remain data-dependent. The upcoming CPI report could therefore carry outsized weight, shaping both investor sentiment and monetary strategy for the rest of the year.
“Because we haven’t gotten any government data in the recent past, I think all of the market’s focus and all of the market’s attention is going to be directed onto this one report,” said Troy Ludtka, senior U.S. economist at SMBC Nikko Securities. “This is going to be the report to end all reports.”
Uncertainty Amid Data Gaps
The government shutdown has delayed several key economic indicators, including employment and retail sales reports, leaving investors with limited visibility into the broader economy. That uncertainty has led to heightened market sensitivity, with even modest data releases sparking larger-than-usual swings in bond and equity markets.
The renewed rise in Treasury yields suggests investors are hedging against the possibility of sticky inflation — a scenario that could force the Fed to slow the pace of its anticipated rate cuts. On the other hand, a softer CPI reading could reinforce confidence that disinflationary trends remain intact.
“The market has been flying blind for weeks,” noted one strategist at a New York investment firm. “This CPI release won’t just influence yields — it will reset expectations for everything from rate cuts to the dollar’s trajectory.”
The Broader Economic Backdrop
Despite recent volatility, Treasury yields remain well below their mid-2024 peaks, when the 10-year briefly topped 4.5%. The Fed’s rate-cut cycle, which began earlier this year, has eased some borrowing costs but also reignited debate about the potential for reaccelerating inflation if policy loosening proves premature.
With both inflation and employment data arriving in a compressed window before the Fed’s decision, markets could experience heightened turbulence in the coming days. For now, traders appear to be positioning cautiously — betting on moderation in consumer prices but bracing for surprises.
As the data drought ends, all eyes will be on whether this long-awaited report confirms the Fed’s narrative of steady disinflation — or challenges it at a critical policy juncture.