US 10-year, 30-year yields hit fresh 24-year highs amid negative bond sentiment
US Treasury yields mostly rose on Monday, with 10- and 30-year yields hitting fresh 24-year highs as recent negative sentiment in the bond market prevailed. Investors weighed the outlook for higher rates, with CME Group data showing about a 76% chance of the Fed holding rates steady in October.
Investors digest US services sector data Chance of Fed holding rates steady in October at about 76%, CME Group data show Market also focusing on upcoming Treasury auctions (Updates to afternoon) By Caroline Valetkevitch NEW YORK, Oct 5 (Reuters) — US Treasury yields mostly rose on Monday, with 10- and 30-year yields hitting fresh 24-year highs as recent negative sentiment in the bond market prevailed and investors weighed the outlook for higher rates. Yields held higher after economic data suggested inflation could remain elevated into 2027.
An Institute for Supply Management report showed US services sector activity slowed in September, while strong domestic demand stretched supply chains and pushed a measure of prices paid by businesses for inputs to its highest level in more than four years. "There wasn't anything there to push yields in the other direction," said Jim Barnes, director of fixed income at Bryn Mawr Trust. Overseas fiscal concerns also continued to weigh on the US bond market, he said. "It's that overall theme that's been hanging over the bond market — fiscal concerns around the globe with various developed markets," he said.
"When it pops up somewhere... " Bonds have been selling off across the globe, driving yields higher, amid concern over government debt in France and elsewhere and worries over higher inflation and oil prices tied to the US-Israeli war with Iran. Yields in Spain were higher on Monday after Spanish Prime Minister Pedro Sanchez called a snap election for November 29 in an attempt to strengthen his mandate after parliament rejected the government's housing decrees last week amid protests. US yields rose on Monday even as oil prices fell.
Oil fell after crude exports from the Middle East increased and the Group of Seven nations pledged to boost supplies. Chances of a Federal Reserve interest rate hike this month were diminished by recent cooler-than-expected inflation readings for July and August as well as a slowdown in US nonfarm payroll growth in September. On Friday, US Treasury yields reversed their earlier declines despite the weaker-than-expected jobs report for September. "We're seeing reports that are weak that we should be rallying on and we're still seeing rates drift higher.
That sentiment kind of lingers in markets, so the base case if we're not seeing much (data)... is we might see that drift higher just based on sentiment," said Molly Brooks, US rates strategist at TD Securities. Traders were last pricing in a roughly 76% probability that rates would be unchanged at the Fed's October 27-28 meeting, according to CME Group's FedWatch Tool. Traders saw nearly a 90% chance of a rate hike in December.
Last month, the Fed raised rates for the first time since 2023 in an effort to control inflation. Investors also will be watching upcoming Treasury auctions, including a 3-year auction on Tuesday. Weak demand at auctions last month added to the recent selloff in bonds. 311%.
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