US TREASURY YIELDS HIT 24-YEAR HIGHS AS FED RATE EXPECTATIONS SHIFT
US Treasury yields climbed to multi-year highs, with the 10-year Treasury yield reaching 5.33% and the 30-year yield rising to 5.67%. The 2-year Treasury yield also advanced to 4.92%, keeping US interest rates and monetary policy expectations in focus.
Higher oil prices have added to inflation concerns, while markets continue to assess the implications for future Federal Reserve policy. At the same time, softer-than-expected US inflation data has reduced expectations for an October rate increase.
According to the CME FedWatch Tool cited in the source, markets are now pricing around a 39% probability of a Fed rate hike in October, down from nearly 51% before the latest inflation release.
August US PCE inflation rose 0.3% month-on-month, below the 0.4% forecast, while core PCE increased 0.2%, compared with expectations of 0.3%. Annual headline PCE inflation slowed to 3.4%, below the projected 3.7%.
Market attention now turns to Friday’s US Nonfarm Payrolls (NFP) report. Consensus expectations point to 90,000 jobs added in September, with the unemployment rate expected to remain at 4.1%. The data could provide further context for the outlook on US interest rates and Treasury yields.
For market participants, the key factors remain the 10-year yield at 5.33%, the 30-year yield at 5.67%, the 2-year yield at 4.92%, Fed rate expectations, PCE inflation and September NFP data, which may provide further direction for US rates and the US Dollar.
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