FX.co ★ US 10-Year Treasury Yield Steady After Sharp Rise

The yield on the US 10-year Treasury note was little changed around 5.24% on Tuesday, pausing after the previous session’s sharp move, when the benchmark yield jumped 8 basis points to its highest level since mid-2007. The move reflects traders’ continued expectations of further monetary tightening by the Federal Reserve.

At the same time, US–Iran negotiations aimed at ending the conflict and fully reopening the Strait of Hormuz have made little progress. The ongoing tension is keeping upward pressure on oil prices and stoking fears that inflation could reaccelerate.

Robust US economic activity, together with worries over sizable fiscal deficits and rising government debt, is also weighing on the bond market. Investors are looking ahead to a series of key economic data releases this week for additional insight into the strength of the US economy.

Swaps markets are now pricing in nearly a full percentage point of additional Fed rate hikes over the coming year. The benchmark 10-year yield is up nearly 46 basis points so far in September.