US Treasury yields hit multi-year highs as Middle East tensions rise
The 10-year yield touched its highest since mid-June 2007 and the 30-year since mid-May 2004 before easing. Traders also raised bets on a 25-basis-point Fed hike in October to about 68% from 64% on Friday.
2741% Qatari mediators likely to hold separate talks with Iran and US on Monday or Tuesday, official says (Updates prices to late afternoon) By Sinéad Carew Sept 28 (Reuters) — US Treasury yields slowed their advance after hitting multi-year highs on Monday as oil futures pared gains on renewed hopes for Middle East negotiations, providing some relief for investors worried about stubborn inflation and Federal Reserve interest rate increases.
Earlier in the day yields on 30-year Treasury bonds had hit their highest levels since mid-May 2004, while 10-year Treasury yields touched their highest since mid-June 2007 before paring gains and 2-year yields touched their highest point since May 2024. Yields had climbed in response to the weekend news that US President Donald Trump had rejected a peace proposal from Iran to reopen the Strait of Hormuz and end fighting in the Middle East.
By late morning, however, an official briefed on the negotiations told Reuters that Qatari mediators were likely to hold separate talks with Iranian Foreign Minister Abbas Araqchi in New York and with the US side on Monday or Tuesday in a fresh push to end the war. After rising more than 4% earlier in the day, US crude oil futures were barely higher in afternoon trading. Traders increased bets that the Federal Reserve will raise interest rates by another 25 basis points in October to a 68% probability from 64% on Friday, and added to bets for another rate hike in December, according to CME Group's FedWatch tool.
Along with rising oil futures, hawkish comments from Fed officials have helped push yields higher in recent days. On Monday, Fed Governor Lisa Cook said she expects continued inflationary pressure in coming months stemming from AI-related demand and higher oil prices, although she stopped short of saying more interest rate hikes will be needed. "Oil prices are up again after the Middle East ceasefire offer was rejected by Trump. There's likely going to continue to be upward pressure on bond yields as long as the Iran conflict uncertainty is out there," said Lawrence Gillum, chief fixed income strategist for LPL Financial.
"Higher oil prices are going to lead into future inflation reports. " But while traders are betting on as many as four more hikes in the next year, Gillum said he expects inflation is going to slow in the next year and that "some of the pricing is too aggressive". 2741%. 5829%.
9555%. 50 earlier in the day. While Monday morning was quiet on the economic data front, investors are waiting for August's Personal Consumption Expenditures report, due out on Wednesday, and September's non-farm payrolls report on Friday. com)