CPI the Core inflation, which is the focus of most traders, rose 0.6 percent in August, a larger increase than in July. Although the US inflation decreased in August; But it was still higher than economists had expected, signaling that the US Federal Reserve will remain aggressive in raising interest rates.
Also Eight days before the new Federal Reserve interest rate meeting, the 3-month bond yield has increased by 0.75% in the transactions so far. After announcing the inflation data, the yields of government bonds with different maturities increased by +6%.
The point being that the 3month is highly correlated to the federal funds rate, It seems ,the Federal Funds Rate continues to rise , likely at a more modest pace and maybe with less regularity.
------------------------------- Bond Yields: The yield on a government bond is the interest rate that the government borrows at. Government bonds, because they are safe, therefore tend to have a lower yield because investors are not demanding a high rate of interest for lending to the government.
Bond yield is the return an investor realizes on an investment in a bond.
A bond can be purchased for more than its face value, at a premium, or less than its face value, at a discount .
The current yield is the bond's coupon rate divided by its market price.
Price and yield are inversely related and as the price of a bond goes up, its yield goes down.
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