FX.co ★ US 10-Year Yield Hovers at Multi-Year Highs

The yield on the US 10-year Treasury note hovered around 4.96% on Monday, close to its highest level since October 2023, as investors braced for the upcoming Federal Reserve policy decision and evaluated the impact of rising oil prices. Markets are currently pricing in an 86% probability that the Fed will raise its policy rate by 25 basis points on Wednesday, with an additional increase anticipated later this year.

Data released on Friday showed underlying inflation was stronger than expected, with core CPI rising 0.3% month-on-month. The recent surge in oil prices has added further inflationary pressure, following Saudi Arabia’s shutdown of the key East–West pipeline, a crucial alternative to shipping through the Strait of Hormuz.

At the same time, the US Treasury Department’s latest bond buyback operation disappointed markets. The government repurchased $5.2 billion in securities, below the $6 billion maximum and roughly half of the $10.5 billion submitted for sale in the operation.