The 10-year yield rises as high as 5.33% despite a softer inflation reading

The 10-year Treasury yield rose as high as 5.33% on Thursday, the highest since April 2002 on LSEG data. It closed Wednesday at 5.29%.

LSEG data put last quarter's rise at 87.1 basis points, the sharpest quarterly rise since 1994. US yields hit two-decade highs for a seventh straight session.

Wednesday's inflation reading did not stop the move. The PCE price index, the inflation measure the Federal Reserve watches most closely, rose 0.3% in August, below a 0.4% forecast. The core index, which leaves out food and energy, rose 0.2%, below a 0.3% forecast.

CME's FedWatch tool put the chance of an October rate hike at about 38%, down from about 50%. An October hike looks less likely than it did before that report. Traders still expect at least three more Federal Reserve hikes before the middle of 2027, after a rate increase last month.

Soaring energy costs have added to inflation, which is one reason yields have climbed. An earlier drop in oil had steadied bonds, but oil is up again this morning. Just after 7 a.m. Eastern time, West Texas Intermediate crude was at $91.61, up 1.3% from Wednesday's settle, and Brent crude was at $99.91, up 1.9%.

The 30-year yield topped 5.65%, its highest since 2002, from a Wednesday close of 5.64%. Bond prices fall when yields rise.

ATLT, the fund that holds long-term US government bonds, was down 0.5% from Wednesday's close before the open. It fell 0.6% on Wednesday and 3.3% over the past five sessions.

The next test for the yield is weekly claims for unemployment benefits, due at 8:30 a.m. Eastern time. The last reading was 197,000, for the week ended September 19.

At 10:00 a.m., the ISM manufacturing survey for September is due. A reading above 50 means factories are expanding, and August's 54.6 was an eighth month above that line. The survey's prices index was 71.1, a 23rd month of rising raw-material prices.

A record quarter, and a stock that barely moved

Micron's revenue last quarter was $54.23 billion, up 379% from a year earlier and 31% from the quarter before. The company forecast about $61.5 billion for the quarter now underway, and called the quarter a record.

"Micron's numbers are another strong validation of AI and memory demand, but markets may increasingly be asking whether we are closer to peak memory shortage, even if demand continues to exceed supply," said Charu Chanana, chief investment strategist at Saxo.

Micron's shares were up less than 0.1% before the open. ASMH, the fund that holds semiconductor stocks, was up 1.1% from Wednesday's close before the open. Japan's Nikkei 225 closed up 3.3%, led by chip and AI-related shares after Micron's forecast.

South Korea's exports were a monthly record of $120.9 billion in September, up 83.5% from a year earlier, and semiconductor shipments more than tripled. The KOSPI closed nearly 2% higher. CEWY, the fund that holds South Korean stocks, was up 1.2% from Wednesday's close before the open.

Before the open, AQQQ, the fund that holds the Nasdaq-100, was up 0.8% from Wednesday's close, while ASPY, the fund that holds the S&P 500, was up 0.4% and ADIA, the fund that holds the Dow industrials, was up 0.1% from that close.

Claims and the factory survey this morning are the next numbers that can move the 10-year yield, which rose even after a soft inflation reading. Friday's jobs report, at 8:30 a.m., is the larger test.