The yield on the US 10-year Treasury note edged down to 4.78% on Wednesday, pausing after a five-session advance that had pushed it above 4.81%, its highest level since October 2023. A modest decline in oil prices offered some relief from inflationary pressures, even as tensions in the Middle East remained elevated and energy prices stayed near six-week highs.
Money markets are now assigning nearly a 66% probability to a 25 bps rate hike by the Federal Reserve later this month, a sharp increase from about 40% a week earlier. The shift in expectations came after Fed Chair Kevin Warsh reaffirmed the central bank’s determination to bring inflation under control in a speech at the Jackson Hole Symposium.
Investors are now looking ahead to Friday’s jobs report for additional insight into the strength of the labor market, following the ADP release, which indicated a further slowdown in private-sector employment growth in August.
