The yield on the 10-year US Treasury note inched higher to 4.24% on Thursday after testing the 4.20% mark earlier in the session as an unexpected surge in producer prices challenged the disinflation momentum in the US economy. Both headline and core producer prices jumped by 0.9% from the previous month, both at three-year highs, instead of bets of 0.2% increases to reflect higher cost pressures for businesses. The results rekindled concerns that expansionary fiscal policy and tariffs by the government may prevent inflation from converging to the Fed's target, contrasting with the tame CPI figures released earlier in the week. While markets continued to be confident of a 25bps rate cut in the Fed's upcoming September meeting, rate futures showed lower confidence over three total cuts for the rest of the year. Tariffs and higher deficit spending had already driven indirect bidders from lower bids in the latest 10-year note auction.