Treasury Curve Flattens After Hot CPI as 10-Year Ends at 5.19%

Short-term Treasury yields rose and long-term yields fell on Wednesday, Oct. 14, flattening the curve on the day a hotter-than-expected September inflation report came out. The 2-year yield closed at 4.82%, up 3 basis points, and the 10-year closed at 5.19%, down 2 basis points, according to the Treasury Department's daily par yield curve.

The 10-year close was its lowest since Sept. 25. The gap between the 10-year and 2-year yields, a common read on the shape of the curve, narrowed to 0.37 percentage point from 0.42 on Tuesday.

How did Treasury yields close after CPI?

The 2-year yield, which tracks expectations for Fed policy most closely, posted the biggest gain among notes. The 5-year was unchanged. The longest maturities fell the most.

Maturity	Oct. 13 close	Oct. 14 close	Change
3-month	4.26%	4.28%	+0.02
2-year	4.79%	4.82%	+0.03
5-year	5.00%	5.00%	0.00
10-year	5.21%	5.19%	-0.02
30-year	5.56%	5.52%	-0.04
10s–2s spread	0.42 pt	0.37 pt	-0.05

Source: U.S. Department of the Treasury, daily par yield curve rates. Spread calculated from those closes.

Compared with the Sept. 30 close, the 10-year is down 10 basis points and the 2-year is down 6 basis points.

What was in the September CPI report?

The Consumer Price Index rose 0.6% in September and 3.7% from a year earlier, up from 3.4% in August, the Bureau of Labor Statistics said. Prices excluding food and energy rose 0.3% on the month and 2.6% over the year, up from 2.4%. Gasoline rose 9.1% in September, "accounting for over half of the monthly all items increase," the BLS said.

Both annual readings topped forecasts of 3.6% for headline and 2.5% for core, Kiplinger and Trading Economics reported. Our morning research note on September CPI and the Fed's Oct. 28 decision has the full breakdown.

Why did the 2-year rise while the 10-year fell?

Trading Economics said the 10-year yield "surged up to 10bps to 5.3%" after the release and that the report "strengthened expectations of another Federal Reserve rate hike this month," with the probability of such a move rising to around 50% from about 22% before the data. We did not find a sourced explanation for why long-term yields gave back that jump by the close, and we are not offering one.

In comments compiled by Kiplinger, Jeff Schulze of Franklin Templeton Institute said "the steady rise in long yields has increased corporate/consumer borrowing costs and tightened financial conditions alongside the Fed's move, meaning the bond market has been doing some of the heavy lifting for the Fed."

When is the next Fed decision?

The Federal Reserve's next policy meeting is Oct. 27–28, according to its meeting calendar, with the decision due Wednesday, Oct. 28. The target range is 3.75% to 4% after a quarter-point increase on Sept. 16, the Fed said that day. See our FOMC meeting schedule for 2026 and 2027 for every date and decision, and Tuesday's brief on Treasury yields before CPI for the prior session.