US 10-Year Yield Holds Retreat

The yield on the US 10-year Treasury note held around 4.76% on Friday after pulling back from three-year highs, as traders reduced bets on a Federal Reserve rate hike this month following dovish remarks from a central bank official. Fed Governor Christopher Waller said he would support keeping rates unchanged if price pressures continue to ease, adding that his next policy decision will be heavily influenced by August inflation data due next week. Traders now see roughly a 50% probability of a September rate hike, down from about 63% a day earlier. Investors are also awaiting Friday’s August jobs report for further clues on the Fed’s policy outlook. Meanwhile, oil prices were on track for a strong weekly gain amid ongoing hostilities in the Middle East and heightened uncertainty over shipping through the Strait of Hormuz, keeping inflationary risks in focus.

The yield on the US 10-year Treasury note fell to 4.74% on Thursday, extending a modest decline from the previous session, after rising to 4.81% earlier in the week, its highest level since October 2023. Comments from Fed Governor Waller that “if there is continued progress toward our 2% goal, then I am willing to support holding the policy rate at its current level”, offered support to Treasuries. Also, a moderation in oil price gains offered some relief from concerns over mounting inflationary pressures. Markets are currently pricing roughly a 50% probability of a Fed rate hike this month, down from around 70% earlier in the week, when a spike in oil prices heightened inflation concerns and following Fed Chair Warsh’s pledge at the Jackson Hole Symposium to keep inflation under control. Investors now await Friday’s jobs report for an update on the labour market, while the next key inflation readings are due next week.

The yield on the 10-year US Treasury note traded around 4.78% on Thursday after pulling back from three-year highs, as investors continued to assess the outlook for Federal Reserve monetary policy. New York Fed Bank President John Williams said there is evidence that inflation continues to ease as the impact of tariffs fades, while higher energy prices have yet to spread to other services. Data on Wednesday also showed that US private employment growth slowed in August. Still, markets are pricing in around a two-thirds chance of a Fed rate hike later this month following Chair Kevin Warsh’s hawkish remarks on Friday. Investors now look ahead to the latest weekly jobless claims data on Thursday ahead of Friday’s August payrolls report for fresh insight into the state of the US labor market. Elsewhere, oil prices halted their rally after President Donald Trump said the latest attacks on Iran would be short-lived, easing inflation concerns.