US treasury yield jumped to 2.5% on hawkish Yellen

Treasury yield shot up after Yellen speech suggested the central bank is on a mission to raise rates at latest thrice in 2017.

The yield on the 10-year Treasury note jumped to 2.5% in the overnight trade and was last seen trading around 2.48%. The 2-year yield, which is more sensitive to the short-term rate hike bets, shot up to 1.25%.

Yellen said it “would be unwise to delay the rate hike, potentially requiring the FOMC to eventually raise rates rapidly, which could risk disrupting financial markets and pushing the economy into recession.”  March rate hike odds jumped to 36% from 30% prior to Yellen’s testimony.

The yields could trade flat to positive today ahead of the US data release, which is expected to show the cost of living as represented by the consumer price index (CPI) rose to 2.4% y/y in Jan. Meanwhile, retail sales growth is seen slowing to 0.1% in January from the December figure of 0.6%.