Treasury yields rose on Wednesday as traders assessed the release of hotter-than-expected inflation data, while the Federal Reserve kept interest rates unchanged, as expected.
The benchmark 10-year Treasury note yield traded up more than 6 basis points at 4.265%. The 2-year Treasury note yield rose more than 10 basis points to 3.775%.
One basis point is equal to 0.01%, and yields and prices move in opposite directions.
Fed officials said Wednesday in a statement that they would monitor the economic implications of the U.S.' war against Iran, adding that its impact, if any, remains "uncertain."
"The implications of developments in the Middle East for the U.S. economy are uncertain, the officials said. "The Committee is attentive to the risks to both sides of its dual mandate."
However, the central bank underscored its objective to lower interest rates, with another rate cut to come sometime later this year.
"The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective," Fed officials said in their statement.
Saira Malik, chief investment officer at Nuveen, still expects more rate cuts in 2026.
"Our view is still that you can maybe get two cuts later this year because the economy will slow if the war ends in a reasonably timely manner and oil doesn't stay above something like $120 a barrel for an extended period of time, inflation will move behind us," Malik, told CNBC on Wednesday. "I think you could still get maybe two cuts this year and early cuts in 2027."Â
Hot PPI
The producer price index increased a seasonally adjusted 0.7% last month, the Bureau of Labor Statistics reported Wednesday, dimming the outlook for interest rate reductions by the U.S. central bank later this year. Excluding food and energy costs, core PPI increased 0.5%. Economists surveyed by Dow Jones had been looking for increases of 0.3% for both measures.
On a 12-month basis, PPI inflation stood at 3.4%, the most since February 2025, according to the BLS. The Federal Reserve targets inflation at 2%.
Oil prices also climbed on Wednesday in the wake of escalating attacks on the United Arab Emirates' energy infrastructure, adding to traders' expectations for further price pressures.
— CNBC's Jeff Cox, Pia Singh and Lee Ying Shan contributed to this report.