by Coinstrooper Crypto Articles
Quick Take
  • Bond yields pulled back last week, with the 10-year Treasury yield down 14.6 basis points.
  • Fidelity’s Jurrien Timmer says a range may be forming, but he blames sticky inflation and fiscal risk for the climb.
  • Still, the drop followed a hotter Consumer Price Index (CPI) reading, with annual inflation at 3.7% against 3.6% expected.
  • The Federal Reserve (Fed) meets October 27-28, when it will decide whether to raise rates again.

What Happened

Jurrien Timmer, Director of Global Macro at Fidelity Investments, in a post

Then yields reversed. The reversal was called it the largest weekly decline in seven months. Investors sought safety in Treasuries during a chip stock sell-off tied to AI spending doubts.

Market Context

Still, the drop followed a hotter Consumer Price Index (CPI) reading, with annual inflation at 3.7% against 3.6% expected. The Federal Reserve (Fed) meets October 27-28, when it will decide whether to raise rates again.

Timmer rejects the tidy version of events, he wrote on X. In that version, growth lifted yields and AI capital spending (capex) worries pulled them down.

Markets now see little chance of a hike. CME Group’s FedWatch, which tracks futures pricing, put the odds at 17.2% on Monday, down from 57.6% a month earlier.

Why It Matters

Bond yields pulled back last week, with the 10-year Treasury yield down 14.6 basis points. Fidelity’s Jurrien Timmer says a range may be forming, but he blames sticky inflation and fiscal risk for the climb.

“in my view the rise in yields this year has been multi-factorial, including sticky structural inflation and mounting fiscal risk.”

The 10-year yield briefly touched 5.33% after the October 14 report, XTB Research data shows. Core CPI, which strips out food and energy, rose 2.6% annually against 2.5% expected.

However, officials have not shut the door. New York Fed President John Williams still expects one more rate hike this year.

That mix could keep stocks and crypto sensitive to AI spending headlines as well as inflation prints.

The post Fidelity's Timmer Blames Sticky Inflation and Fiscal Risk for Rising Bond Yields appeared first on BeInCrypto.

Details

Why Timmer Thinks the Bond Yields Story Is Too Neat

His explanation is broader.

Can Yields Settle While the Pressures Behind Them Stay Put?

Bank of America is holding its October hike call too, though economist Aditya Bhave described his conviction as low.

The 10-year breakeven rate, drawn from inflation-protected Treasuries, sat near 2.36% on Monday, Reuters data shows. That implies average inflation of about 2.4% a year for the next decade.