Treasury Yields Continue to Rise to Multi-Year Highs
The yield on the US 10-year Treasury note extended its rise for a third consecutive session, reaching 5.14%, its highest level since July 2007 and the 30-year yield climbed above 5.44%, its highest since 2004. Borrowing costs have risen as oil prices moved higher amid elevated tensions between the US and Iran, while talks on the sidelines of the UN General Assembly have made little progress toward ending the conflict. Higher energy prices are likely to add further pressure on inflation, particularly as US diesel prices hit a new record high. Against this backdrop, traders have increased bets on further Fed tightening this year. Markets are now pricing nearly a 75% chance of another 25 bps rate hike in October and more than a 58% probability of a similar move in December. Recent comments from several Fed officials have also been perceived as hawkish. Adding to pressure on the bond market, the September S&P Global PMI pointed to continued strength in US economic activity.
44%, its highest since 2004. Borrowing costs have risen as oil prices moved higher amid elevated tensions between the US and Iran, while talks on the sidelines of the UN General Assembly have made little progress toward ending the conflict. Higher energy prices are likely to add further pressure on inflation, particularly as US diesel prices hit a new record high. Against this backdrop, traders have increased bets on further Fed tightening this year.
Markets are now pricing nearly a 75% chance of another 25 bps rate hike in October and more than a 58% probability of a similar move in December. Recent comments from several Fed officials have also been perceived as hawkish. Adding to pressure on the bond market, the September S&P Global PMI pointed to continued strength in US economic activity.