10-year Treasury yield slides as key inflation report is as expected

Treasury yields slid on Wednesday as a key inflation reading met expectations.

The yield on the 10-year Treasury fell more than 3 basis points to 4.27%. The 2-year Treasury yield dipped 2 basis points to 4.23%.

One basis point is equal to 0.01% and yields and prices move in opposite directions.

Investors are especially waiting for the October personal spending and income release, which contains the personal consumption expenditures, or PCE, and is considered to be the Federal Reserve's preferred inflation gauge. The data is set to be released at 10 a.m. ET on Wednesday.

Economists expect a 2.8% year-over-year increase for the core reading, which excludes food and energy prices, according to a Dow Jones estimate.

A summary of the Fed's meeting minutes from November was published on Tuesday, with Fed officials expressing confidence that inflation is easing and that further interest rate cuts will happen at a gradual pace.

"In discussing the outlook for monetary policy, participants anticipated that if the data came in about as expected, with inflation continuing to move down sustainably to 2 percent and the economy remaining near maximum employment, it would likely be appropriate to move gradually toward a more neutral stance of policy over time," the minutes said.

Traders are pricing in a 66% chance that the Fed will cut rates by a quarter point in its next December meeting, with 33% expecting no change, according to the CME Group' FedWatch Tool..

Meanwhile, President-elect Donald Trump's pick of Scott Bessent as Treasury secretary, continues to calm investors nerves. As a fiscal conservative, Bessent is expected to prioritize market stability.