Treasury Yields Hold Near 5% as Markets Await the Fed

US government bond yields remained relatively stable during Monday's trading (Sept 14) following a sharp sell-off in recent sessions. The 10-year Treasury yield held around 4.978%, slightly below the psychological 5% level breached on Friday.

The 30-year yield hovered around 5.353%, while the 2-year yield rose to 4.643%. The 2-year yield is particularly sensitive to shifts in expectations regarding Federal Reserve interest rates, as it reflects the near-term trajectory of monetary policy.

Markets currently price in an approximately 86% probability that the Federal Reserve will raise interest rates by 25 basis points at this week's meeting. Expectations for a rate hike intensified after US inflation held at 3.4% and Core CPI rose 0.3% month-on-month. Markets are also beginning to factor in the possibility of an additional rate hike in December.

Inflationary pressures have mounted as Brent crude prices rose by about 3%, approaching US$112 per barrel. Concerns over supply remain elevated due to attacks on Saudi Arabian oil infrastructure, Houthi threats to Red Sea shipping lanes, and delays in diplomatic talks between Iran and Gulf nations.

Newsmaker Analysis: Treasury yields could remain elevated as long as markets anticipate a hawkish Fed stance and energy prices continue to climb. Should the Fed raise rates and signal further tightening, the 10-year yield may retest the 5% level—a move that could bolster the dollar while weighing on gold, equities, and other risk assets. (arl)

Source: Newsmaker.id