The yield on the US 10-year Treasury note extended its advance at the start of the week, climbing above 5.2% to its highest level since mid-2007. Oil prices also resumed their upward trajectory amid a lack of progress in negotiations between the US and Iran aimed at ending the war and reopening the Strait of Hormuz.
Renewed inflation concerns have reinforced expectations of further Federal Reserve tightening, with markets now pricing in nearly a 65% probability of a 25 bps rate hike next month and a 53% chance of another increase in December.
Investors are also preparing for a busy week of key economic data releases, including the PCE inflation report and the monthly jobs report. These indicators are expected to offer additional insight into the health of the US economy and help shape expectations for the Fed’s next policy moves. At the same time, strong economic data, deteriorating fiscal conditions, and rising government debt in the US have added pressure to the Treasury market in recent weeks.
