The yield on the 10-year US Treasury note hovered around 5.11% on Thursday after jumping 16 basis points in the previous session, staying close to its highest level since July 2007. The move followed a run of strong economic data that intensified inflation concerns and reinforced expectations of further policy tightening.
The latest surge in Treasury yields gained momentum after a weak $70 billion auction of five-year notes. At the same time, S&P Global data showed US private-sector activity in September expanding at its fastest pace in more than five years, with both services and manufacturing strengthening but also facing mounting inflationary pressures.
Several Federal Reserve officials have reiterated their backing for last week’s rate increase and cautioned that inflation risks remain elevated. Markets are now pricing in roughly a 70% probability of another Fed rate hike in October, up from 55% just a day earlier.
In addition, uncertainty surrounding US–Iran negotiations has kept oil prices elevated, further stoking inflation expectations.
