Traders work on the floor of the New York Stock Exchange (NYSE) on Monday, November 17, 2025 in New York, USA.
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U.S. Treasury yields rose on Friday as investors heard that the most closely watched inflation measure by the Federal Reserve was lower than expected in September, the most recent month available due to the prolonged government shutdown in October and November.
Ahead of the central bank’s final policy meeting of the year next week, the 10-year bond yield rose more than 3 basis points to 4.139%, and the 30-year bond yield rose more than 3 basis points to 4.795%. The two-year US Treasury yield also rose more than 3 basis points to 3.564%.
One basis point equals 0.01%, and yields and prices move in opposite directions.
The core personal consumption expenditure price index, which excludes volatile food and energy prices, rose 0.2% from the previous month, for an annualized rate of 2.8%. The monthly rate was in line with the consensus of economists surveyed by Dow Jones, but the annual rate was 0.1 percentage point lower.
According to the Department of Commerce’s Bureau of Economic Analysis, headline PCE rose 0.3% in September, bringing the annual inflation rate to 2.8%. Both of these measurements were as expected.
Overall, the PCE report gives the Fed the green light for yet another widely expected interest rate cut next week, which would lower the benchmark overnight lending rate to 3.50% to 3.75%.
“Overall, this data is consistent with the Fed cutting rates by another 25 basis points next week, but does not suggest any urgency for the Fed to accelerate the pace of rate cuts in 2026,” Ian Lingen of BMO Capital said in a note.
Separately, the University of Michigan’s preliminary consumer sentiment for December was 53.3, compared to Wall Street’s estimate of 52.0.
Friday’s statistics helped dispel concerns about a slowdown in the U.S. labor market. On Thursday, employment agency Challenger, Gray & Christmas said layoffs, AI and tariffs contributed to a jump in job losses to more than 1 million in 2025 for the first time since the pandemic. Processor ADP announced Wednesday that private payrolls fell by 32,000 jobs in November.
—CNBC’s Jeff Cox contributed reporting
