Bond yields ease off 24 year highs as banks open earnings season and inflation data looms

Wall Street's week turns on two things: what the big banks say about the economy, and what Wednesday's inflation report says about prices.

Bank earnings season opened Tuesday with JPMorgan, Goldman Sachs, Citigroup and Wells Fargo reporting first, followed by more lenders over the next two days. Bank results are read as a health check on households and businesses at once, since the same institutions hold the credit cards, mortgages and corporate deals that show stress early. Stock futures pointed in different directions early in the week, with Dow futures rising while the tech heavy Nasdaq 100 slipped, as Asian chip stocks sold off sharply, including a 5.5 percent fall in South Korea's Kospi.

In the bond market, yields came down as trading resumed after the Columbus Day closure. The 10 year Treasury yield traded at 5.199 percent and the 30 year at 5.557 percent as of Tuesday, both below the 24 year highs reached last week. Analysts at DZ Bank estimated the extra yield investors demand for holding long term government debt at 91 basis points, the highest since 2014 but in line with the long run average since the early 1990s.

Wednesday's consumer price report for September is the week's hinge. A Wall Street Journal poll of analysts expects headline inflation of 3.6 percent against a year earlier, up from 3.4 percent in August, as of October 13. The Federal Reserve meets on October 28. Markets put the probability of a rate increase at that meeting at 19 percent, while pricing in three hikes over the next twelve months, according to LSEG. Macquarie strategist Thierry Wizman wrote that even an acceleration in September inflation is unlikely to move the Fed to raise rates this month. This is a report of market conditions and analyst expectations, not financial advice.