FX.co ★ US 10-Year Yield Holds at Near 3-Year High

The yield on the 10-year US Treasury note climbed to about 4.97% on Friday, reaching its highest level since October 2023 after the US Treasury Department’s first expanded buyback operation drew weaker-than-expected demand. The government repurchased $5.2 billion in bonds, below the $6 billion cap and roughly half of the $10.5 billion offered.

Yields pushed higher further after data showed US producer prices rose more quickly in August, as the war involving Iran drove up wholesale energy costs. Investors are now awaiting the latest consumer inflation figures. Markets are currently pricing in roughly a 71% chance that the Federal Reserve will raise interest rates by 25 basis points next week, up from about 61% before the PPI report.

At the same time, oil prices surged above $100 per barrel, as the US and Iran showed no signs of easing tensions, heightening concerns about prolonged disruptions to global energy supplies and the risk of more persistent inflation.