FX.co ★ US 10Y Yield Hits Highest Since January 2025

The yield on the US 10-year Treasury note rose to about 4.78% on Tuesday, its highest level since January 2025, as climbing oil prices and hawkish signals from the Federal Reserve reinforced expectations of an interest rate increase this month. Investors were also preparing for a heavy data calendar, with the latest readings on US manufacturing and services activity due later today, ahead of the closely watched August jobs report on Friday. Warsh said on Friday that the Fed will “have work to do” if policymakers are not sufficiently confident that inflation is moving toward the 2% target. Following his comments, markets shifted to price in more than a 65% probability of a September rate hike, up from around 36% beforehand. At the same time, oil prices extended gains for a second consecutive session after US forces struck an island in the Strait of Hormuz, prompting Iran to retaliate with attacks on the UAE and Jordan. Rising energy costs are stoking inflation fears and bolstering expectations of a more restrictive Fed policy stance.