US 10Y Bond Yield Hits 19-year High

US 10 Year Government Bond Yield increased to 5.25%, the highest since June 2007. Over the past 4 weeks, US 10 Year Note Bond Yield gained 48.20 basis points, and in the last 12 months, it increased 109.40 basis points.

The yield on the US 10-year Treasury note continued to climb at the start of the week, rising above 5.2% to reach new high levels since mid-2007. Oil prices resumed their upward trend amid a lack of progress in negotiations between the US and Iran to end the war and reopen the Strait of Hormuz. The renewed inflationary concerns have strengthened expectations of further Fed tightening, with traders now pricing in nearly a 65% probability of a 25bps rate hike next month and a 53% chance of a similar move in December. Meanwhile, investors are bracing for a busy week of key economic releases, including the PCE inflation report and the jobs report, which should provide further insight into the health of the US economy and help shape expectations for the Fed’s next policy moves. Strong economic data, deteriorating fiscal conditions and rising government debt in the US have also weighed on the Treasury market in recent weeks.

The yield on the 10-year US Treasury note rose to around 5.2% on Monday, staying at its highest level since July 2007 as expectations strengthened that the Federal Reserve will tighten monetary policy further to contain inflation. Data released Friday showed new orders for key US manufactured capital goods rose more than anticipated in August, pointing to another quarter of solid growth in business spending. The University of Michigan’s consumer sentiment survey also confirmed a sharp increase in inflation expectations in September. Markets are currently pricing in roughly a 66% probability of a Fed rate hike in October. Investors now await the Fed’s preferred inflation gauge and key US jobs data this week for additional guidance. Adding to concerns, Treasury Secretary Bessent’s efforts to contain long-term yields through increased Treasury buybacks are widely viewed as having had limited effect.