The yield on the US 10-year Treasury note rose for a fifth straight session on Tuesday, briefly touching the closely watched 5% mark for the first time since July 2007. It climbed as high as 5.04% before easing slightly to 5.01%.
The latest rebound in oil prices, which pushed crude back above $100 a barrel, is adding to uncertainty over the inflation outlook. This comes as tensions in the Middle East remain heightened and risks to oil supply increase.
Against this backdrop, the Federal Reserve is widely expected to raise interest rates on Wednesday for the first time since 2023. A decision to leave rates unchanged could add further upward pressure on Treasury yields, as markets might read it as a blow to the Fed’s inflation-fighting credibility.
US headline inflation remained at 3.4% in August, while core inflation was 2.4%. Investors will be paying close attention to the Fed’s updated economic projections, with particular focus on its interest rate outlook.
