U.S. Treasury yields climbed on Friday, with the 10-year T-note rate moving back above 5% after sharp losses the previous day. Investors are waiting on fresh data about U.S. growth and inflation before the Federal Reserve announces its interest rate decision next week.

What is driving the Treasury yields rise?

Around 8:40 a.m., the two-year T-note yield rose to 4.675% from 4.646% at the prior close, while the 10-year rate advanced from 4.981% to 5.003%, according to Valor Econômico. The 30-year bond yield also edged higher, to 5.301% from 5.284%.

Read also US stock futures rise ahead of Federal Reserve decision

The moves follow a rough session on Thursday, when a new wave of worry about growth driven by artificial intelligence hit stocks. That selloff pushed investors toward the safety of government debt, briefly sending the 10-year yield below 5% for the first time since September, CNBC reported.

What data are markets watching?

Traders are looking to several releases for signals on the path of growth and prices:

  • Preliminary October purchasing managers' index readings for manufacturing, services and the combined index, which Rabobank expects to show slowing.
  • Final University of Michigan readings on consumer sentiment and inflation expectations.
  • Initial jobless claims, after claims for the week ending Oct. 10 rose by 1,000 to 199,000.

With Fed officials in their quiet period before the Oct. 28 meeting, markets are pricing in no change to rates next week, according to Rabobank.

How does this affect borrowers?

The 10-year Treasury yield is a key reference point for mortgages, auto loans and credit cards. The average 30-year fixed mortgage rate fell to 7.41% last week from 7.5%, the Mortgage Bankers Association said.

Energy remains a wild card. Reports of missile strikes on vessels near the Strait of Hormuz and on Saudi energy sites have kept oil elevated, with West Texas Intermediate above $97 and Brent above $108 a barrel at one point this week, adding to inflation concerns.

FAQ

What is a basis point?

A basis point is one-hundredth of one percent (0.01%). Yields and bond prices move in opposite directions.

When is the Fed decision?

The Federal Reserve's interest rate decision is scheduled for Oct. 28.