The yield on the US 10-year Treasury note edged down to 4.97% on Wednesday, pausing after five consecutive sessions of gains that pushed it to 5.04% on Tuesday, its highest level since July 2007. Investors are now focused on the Federal Reserve’s policy decision due later in the day. The central bank is widely expected to raise interest rates by 25 basis points, which would be its first rate hike since 2023. Futures markets are currently pricing in roughly a 93% probability of such a move, with another increase anticipated in December.
A pullback in oil prices also provided some temporary relief from inflationary pressures. Treasury yields have been climbing on the back of previously higher oil prices, which are likely to stoke inflation and prompt tighter monetary policy, as well as on concerns over persistently large US fiscal deficits. On Tuesday, Treasury Secretary Bessent attributed the rise in bond yields to “global issues” and told lawmakers at a congressional hearing that the need to address the federal deficit was another factor weighing on markets.