10-year Treasury yield hovers at 5.12% as traders weigh producer prices data

The 10-year Treasury yield remained over 5% on Friday after October's producer price index came in slightly less than expected.

The yield — the key benchmark for mortgages, auto loans and credit card debt — rose 3 basis points to 5.131%.

The longer-dated 30-year Treasury bond yield, which tends to react to geopolitical risks, was 3 basis points higher at 5.462%. However, the 2-year Treasury note yield, which is typically more sensitive to short-term Federal Reserve interest rate decisions, was 1 basis point lower at 4.85%.

One basis point is equal to 0.01%, and yields and prices move in opposite directions.

October's producer price index — a key measure of wholesale inflation — rose 0.3% month over month, less than the 0.4% expected from economists polled by Dow Jones. PPI rose 6.5% over the last 12 months, the biggest annual increase since November 2022.

The moves come after 10-year Treasury yields jumped more than 13 basis points to more than 5% during Thursday's session, and the 2-year yield soared more than 15 basis points.

Investors now see a Federal Reserve rate hike next month as a near certainty. Traders are pricing in 100% odds of a rise at the Dec. 9 meeting, according to the CME Group's FedWatch tool. Odds of a 25 basis points hike now stand at 86%, with the chance of a 50 basis point increase at around 14%.

Energy inflation remains in focus, with oil set for its second weekly decline as the prospects of renewed strikes by the U.S. against Iran recede. Prices were choppy in early trade Friday. U.S. West Texas Intermediate futures for December delivery were down 0.1% at $88.63 per barrel. Brent crude was higher by 0.3% at $96.11.