The yield on the US 10-year Treasury note inched up to 5.1% on Monday, following an almost 15 bps decline the previous week, as traders continued to balance domestic inflation and interest rate expectations against broader geopolitical risks. Markets are now pricing in an approximately 83% probability that the Federal Reserve will leave the federal funds rate unchanged at next week’s meeting, while the likelihood of a 25 bps hike in December is estimated at about 75%.
Speaking at the IMF’s annual meetings in Bangkok on Friday, Fed Chair Warsh avoided signaling a specific outcome for this month’s FOMC meeting, emphasizing that hotter-than-expected inflation data had not changed his overall assessment of the US economy. His comments helped solidify market expectations that the Fed will keep rates on hold in the near term. Both CPI and PPI releases last week exceeded forecasts, underscoring persistent price pressures. Oil prices slipped slightly on Monday but remained elevated.