US 10-year Treasury yield eases with lower oil, European yields
The benchmark US 10-year Treasury yield fell on Monday as oil prices dropped and European bond yields also declined, while the two-year Treasury yield hit its highest since July 2024.
Benchmark yields track oil prices lower European yields also fall Two-year Treasury yield hits highest since July 2024 (Updates to afternoon) By Caroline Valetkevitch NEW YORK, Sept 21 (Reuters) — The benchmark US 10-year yield fell on Monday as oil prices dropped and European bond yields also declined, while the two-year Treasury yield hit a more than two-year high. Oil prices slid as investors hoped for diplomatic progress on the Iran war due to this week's United Nations meeting. Higher oil prices tied to the war have partly been behind concerns about inflation.
Chicago Federal Reserve President Austan Goolsbee said on Monday that US inflation may have moved beyond the tariff and energy price shocks of the last 18 months and is now being driven by strong demand as well, potentially requiring a faster pace of Fed hikes. The Fed last week raised rates and flagged more hikes in the coming months in an effort to combat persistent inflation. The yield curve between 2-year and 10-year US notes continued to flatten; 2-year yields are rising faster than 10-year yields as investors price in more rate hikes. 5 bps, the flattest since March 2025.
"Generally the view is that the curve should continue to flatten because the Fed is in a tightening mode," said Tom di Galoma, managing director at Mischler Financial Group. Traders see a roughly 53% chance of another increase when the US central bank next meets in October, according to CME FedWatch. That expectation was at 55% late Friday. Di Galoma said US benchmark yields may also be moving lower with European yields.
Euro area benchmark Bund yields dropped. 522% late on Friday. Investors will closely watch upcoming Treasury auctions in order to gauge market demand. Last week, the Treasury Department saw soft demand for a $19 billion sale of 10-year Treasury Inflation-Protected Securities.
On Tuesday, the Treasury will auction $69 billion of two-year Treasury securities, while five- and seven-year auctions also are due this week. "The market probably does a little bit of selloff on those auctions," Di Galoma said. "I don't think they're going to go all that well. 955%.
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