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U.S. December PPI year-on-year came in at 3.0%, and core PPI year-on-year at 3.3%, slightly above both expectations and the prior readings, with service costs surging and data showing that an increasing number of companies are gradually passing on tariff costs, raising concerns that inflationary pressures may remain elevated.
U.S. President Trump said on Friday that he will nominate Kevin Warsh as the next Federal Reserve Chair, and later Fed Governor Miran said he expects the Fed chair nominee put forward by Trump will be able to effectively lead the monetary policy committee.
Fed officials’ remarks were neutral to slightly hawkish: Atlanta Fed President Bostic (a voting member next year) said that elevated inflation means the Fed should first hold rates steady and then consider whether to cut again later, while St. Louis Fed President Musalem (non‑voter this year and next) said officials should pause further rate cuts for now to avoid exacerbating inflation pressures.​
U.S. Treasury yields ended mixed, mainly because confirmation of the next Fed chair nomination drove a more pronounced move in the yield curve, while gold fell more than 10%, silver dropped over 26%, and the dollar rebounded, providing support to the front end.
The 2‑year Treasury yield fell 3.7 basis points to close at 3.52%; the 5‑year Treasury yield fell 2.8 basis points to 3.79%; the 10‑year Treasury yield rose 0.4 basis points to 4.24%; and the 30‑year Treasury yield climbed 2.0 basis points to 4.87%.
On spreads, the yield curve steepened notably, with the positive 2s10s spread closing at 71.3 basis points and the positive 5s30s spread at 108.4 basis points.​
Today, the 10‑year U.S. Treasury yield is expected to trade in a range of 4.20%–4.26%, and tonight the U.S. will release the final S&P manufacturing PMI and the ISM manufacturing index.