investingLive Americas FX news wrap 11 Mar: Yields climb despite CPI coming in line.Oil up
2026-03-11 20:40:00
The U.S. February CPI report came in largely in line with expectations, reinforcing the view that inflation pressures remain stable but not yet decisively lower. Headline CPI rose 2.4% year-over-year, matching forecasts and unchanged from the prior month. On a monthly basis, CPI increased 0.3%, also in line with estimates and slightly higher than January’s 0.2% gain. Core CPI, which excludes food and energy, held steady at 2.5% year-over-year, while the monthly core reading rose 0.2%, slowing from the 0.3% increase in the prior month.
Looking deeper into the report, some measures of underlying inflation showed modest improvement. The supercore CPI (services excluding housing) rose 0.35% month-over-month, slowing notably from 0.593% previously, although the year-over-year measure edged slightly higher to 2.746% from 2.671%. Real weekly earnings increased 0.1%, a slowdown from 0.5% in the prior month, suggesting wage-adjusted purchasing power is growing but at a slower pace.
Despite the broadly stable inflation picture, some sectors continued to show stronger price pressures, including restaurants (+3.9% y/y), medical care (+4.1%), electricity (+4.8%), and utility gas (+10.9%). Because the report matched expectations across most categories, the market reaction was muted. Looking ahead, March CPI could become more consequential, as it may begin to reflect the impact of the recent Iran-related oil price spike, which could reintroduce upward pressure on energy-driven inflation. Traders were also concerned about the PCE components which would not bode well for the Fed’s favorite measure of inflation.
U.S. Treasury yields moved sharply higher across the curve, with the 2-year at 3.642% (+7.3 bps), 5-year at 3.790% (+7.5 bps), 7-year at 3.991% (+7.6 bps), 10-year at 4.216% (+8.0 bps), 20-year at 4.830% (+9.5 bps), and the 30-year at 4.863% (+9.1 bps). The move reflects continued pressure in the bond market and a modest bear-steepening, as longer-term yields rose more than the front end.
The $39B 10-year Treasury auction also showed below-average demand, stopping at 4.217% vs a 4.210% when-issued level, producing a 0.7 bp tail. The bid-to-cover ratio of 2.45 was slightly below the six-month average, with soft domestic demand (12.8%) partly offset by stronger indirect/foreign demand (74.5%). Overall the auction received a C- grade, reinforcing the theme that investors are demanding higher yields to absorb Treasury supply.
At the same time, crude oil surged $4.30, or about 5.15%, even after the IEA recommended releasing 400 million barrels from strategic reserves. The market remains skeptical that reserve releases alone can offset potential supply disruptions tied to tensions around the Strait of Hormuz, where a large portion of global oil supply flows. Higher oil prices have bond traders wary, as they raise the risk of renewed inflation pressures, helping push Treasury yields higher on the day.
Geopolitical tensions remain elevated as the U.S.–Israel conflict with Iran continues, though rhetoric from President Trump suggests the campaign could be nearing an end. Trump said the U.S. military is “way ahead of schedule” and has inflicted more damage than initially expected, claiming the operation has already surpassed what was anticipated in a six-week timeline. He added that “practically nothing is left to target in Iran” and suggested the war could end soon, noting that the conflict would stop whenever he decides to end the operation. Reports indicate that Iranian leadership and military infrastructure have been hit multiple times, and Trump also said the U.S. has targeted 28 naval mine ships, aimed at limiting Iran’s ability to disrupt shipping routes.
Despite the optimistic tone from the White House, uncertainty remains about the duration and outcome of the conflict. Some U.S. and Israeli officials are reportedly preparing for at least two more weeks of strikes, and any ceasefire may require assurances that no future strikes will occur, which could complicate negotiations. The biggest market concern continues to be the security of shipping through the Strait of Hormuz, a critical chokepoint for global oil supply. Ongoing attacks on vessels in the region have heightened fears of disruption, helping keep energy prices elevated and markets cautious.
In the forex, the U.S. dollar moved broadly higher against most major currencies, supported by rising Treasury yields and ongoing geopolitical tensions that have kept investors cautious. Higher yields across the U.S. curve and concerns about energy-driven inflation have helped underpin demand for the greenback during the session.
Against the majors, the USD gained versus the euro, pound, yen, Swiss franc, Canadian dollar, and New Zealand dollar. The EURUSD fell to 1.1570 (-0.34%), while the GBPUSD edged slightly lower to 1.3415 (-0.01%). The USDJPY climbed to 158.93 (+0.56%), reflecting the widening yield differential between the U.S. and Japan. The USDCHF also moved higher with the pair rising to 0.7796 (0.18%), while the USDCAD rose to 1.3587 (+0.06%). The NZDUSD slipped to 0.5916 (-0.19%).
The one exception was the Australian dollar, with AUDUSD rising about 0.51% to 0.7155, supported by strength in commodity markets and higher energy prices. Overall, the U.S. dollar index climbed to 99.20 (+0.38%), reflecting broad-based strength as traders favored the dollar amid rising yields and geopolitical uncertainty.
U.S. equities finished mixed, as rising Treasury yields, higher oil prices, and geopolitical tensions kept investors cautious. The NASDAQ posted a small gain, supported by technology shares, while the Dow Jones and Russell 2000 moved lower. The S&P 500 closed little changed, reflecting a balance between strength in energy and technology and weakness in several consumer and financial sectors.
Major U.S. Indices
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Dow Jones Industrial Average: 47,417.27 (-0.61%)
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S&P 500: 6,775.80 (-0.08%)
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NASDAQ Composite: 22,716.13 (+0.08%)
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Russell 2000: 2,542.90 (-0.20%)
