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U.S. 10-Year Yield Tops 4% Again

Lokman Vural Elibol | Anadolu Agency | Getty Images

U.S. Treasury yields rose on Friday as markets digested Thursday's higher-than-expected consumer price index reading and kept a close eye on the U.K. economy as the Bank of England's emergency bond-buying program is due to end.

UK gilts ticked up following reports that the government would reverse course yet again on part of its economic plan, supporting yields.

The yield on the 10-year Treasury rose six basis points to 4.002%, at 4:00 p.m. ET, topping the key 4% level for a second time in two days. The 2-year Treasury yield rose six basis points to 4.509, after having risen to levels last seen in August 2007 on Thursday.

Yields and prices have an inverted relationship and one basis point is equivalent to 0.01%.

Markets continued to absorb Thursday's consumer price index reading, which showed that inflation had risen more than expected in September. The price of goods had increased by 0.4% for consumers last month and was up 8.2% from a year ago.

The Federal Reserve has been hiking interest rates to push back against persistent inflation, despite investor concerns about this leading to a recession. Analysts are expecting another 75 basis point rate hike to be announced at the central bank's next meeting in early November.

Retail sales for September were flat, according to a Friday report. A consumer sentiment report from the University of Michigan showed that some inflation expectations for the coming years ticked up, sending stocks down and lifting bond yields.

The economic turmoil in the U.K. is also weighing on markets as the Bank of England's emergency bond-buying program is set to end on Friday. The program is intended to stabilize the British pound and U.K. government bonds, which plummeted after the U.K. government announced its so-called "mini-budget" last month.

The yield on the British 10-year Gilt rebounded after trading down around 20 basis points. At market close in New York, it was up more than 17 basis points at 4.371%.

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