HighIV Macro Policy & Sovereign Debt15 October 2026, Thursday · 15:30 TRT (UTC+3)
US producer inflation jumps to 6.3%, yet Treasury yields fall
US producer prices rose 1.3% month on month and 6.3% year on year in September, the highest annual increase since December 2022. The same day the 10-year Treasury yield fell 10.1 basis points to 5.088%.
According to Investing.com, headline PPI rose 1.3% month on month in September against expectations of 0.3%, the largest monthly increase in roughly four and a half years. Core PPI rose 0.7% on the month and 5.0% on the year, against expectations of 0.3% and 4.4%. Energy in final demand rose 10.8% on the month and accounted for more than 80% of the 2.6% rise in goods prices. Retail sales also rose 0.8% to 745 billion dollars, against expectations of 0.3%.
The bond market moved against the data. According to market figures cited by ZeroHedge, the 10-year yield had climbed to 5.33% intraday after the CPI release and closed 14 October at 5.19%; on 15 October it fell to 5.08%, its lowest since 23 September. The same day South Korea's KOSPI dropped about 7.6% into a bear market, and the Nikkei fell 4.9%. Analysts attributed the bond rally to safe-haven demand fleeing an AI-driven sell-off.
Fed pricing also tracked market stress more than the data. According to Investing.com, the probability of an October hike on CME FedWatch rose to 34% after the PPI release and fell back to 27% by the close. The 2-year yield dropped 4.7 basis points to 4.755%, and the S&P 500 ended the day up 0.3% at 7,744.81.
Talay assessment
Bottom line
Inflation data and bond prices parted ways on 15 October: PPI climbed to 6.3% while the 10-year yield fell 10 basis points. This shows that extended-maturity Treasuries are once again acting as a safe haven, and that the market is pricing stress in AI credit more than inflation. Whether the divergence lasts depends on the path of credit spreads.
Likely effects
- Fed decisionUncertainWeeks
The probability of an October hike fell from an intraday peak of 58% to 27%; financial stress is narrowing the Fed's room to raise rates in October.
- Inflation expectationsNegative1–6 months
A 10.8% monthly rise in energy in final demand increases the risk of pass-through to consumer prices in the coming months.
- TürkiyePositiveWeeks
Lower yields and a softer dollar give emerging-market currencies a brief breather; whether it lasts depends on the AI rout not spreading.
Possibilities, ranked
- 1Safe-haven bid persists50%
Stress in AI credit persists, the 10-year yield stays in a 5.0–5.2% range and the Fed holds in October.
Watch: The US high-yield bond spread and the 28 October FOMC decision
- 2Inflation returns to focus35%
The equity rout calms, the market refocuses on PPI and CPI, and the yield climbs above 5.3%.
Watch: The 10-year yield breaking above the 5.33% intraday high of 14 October
- 3Credit accident15%
The rout spreads to credit markets, the yield falls below 5% and the Fed postpones a hike.
Watch: The high-yield bond spread exceeding 400 basis points
Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.
Market reaction
Indicators affected
- US 10-year yield▲ −10.1 bp
- US PPI, year on year▼ 6.3%
Historical context
US 10-year yield, last 6 months
- 117/09 · Fed dot plot median for 2026 rises to 4.00-4.25% while the 10-year yield eases from 5.04% to 4.94%
- 221/09 · The Fed's Goolsbee: if inflation is coming from demand, the rate response will be sharper and front-loaded
- 323/09 · US Treasury sells $70 billion of 5-year notes at 5.033%; after hot PMIs the 10-year yield hits 5.10%, its highest since 2007
- 424/09 · India's Sensex falls 1,247.71 points to 73,580; rupee presses against the 96 threshold as Brent tops $102 and the US 10-year yield exceeds 5.11%
- 524/09 · US Treasury sells 44 billion dollars of 7-year notes at 5.085%: highest yield since April 1993 as indirect demand falls to 57.2%
- 624/09 · No joint statement at Xi–Trump summit: tariff truce extended by just 2 months from 10 November to 10 January, no new decisions on chips or rare earths
- 725/09 · Michigan consumer sentiment at a 4-month low of 48.1, 1-year inflation expectations jump to 4.6%; US 30-year yield rises to 5.50%
- 827/09 · Bessent urges Fed flexibility on rates, citing AI productivity
- 928/09 · US ten-year Treasury yield climbs to a 19-year high
- 1029/09 · US long-dated yield holds above 5.5% despite Treasury buybacks
- 1130/09 · Softer US inflation erodes the odds of an October rate rise
- 1201/10 · US Treasuries pull back from their peak as two-year yield drops 10 basis points
- 1302/10 · Logan seeks 50 more basis points while most of the Fed waits
- 1405/10 · Nasdaq hits record as Treasury yields touch 24-year high
- 1506/10 · Fed's Schmid and Daly keep the door open to hikes despite high yields
- 1607/10 · Fed minutes point to one more rate rise before year-end
- 1707/10 · US ten-year auction clears at the highest yield in a quarter-century
- 1814/10 · US inflation climbs to 3.7%, putting an October hike back in play