FX.co ★ US 10-Year Yield Rebounds

The yield on the 10-year US Treasury note rose to 4.40% on Tuesday, rebounding from the prior session’s seven-week low of 4.37%, as signs of continued economic strength reinforced expectations of a hawkish Federal Reserve. The latest JOLTS report showed the highest number of job openings in two years, far exceeding market forecasts and aligning with the recent surge in payrolls. This data underscored the resilience of the labor market ahead of new employment figures due Thursday.

Although Fed Chair Warsh resisted offering explicit forward guidance, the combination of solid economic activity and persistently elevated core inflation has led multiple FOMC members to anticipate additional rate hikes this year. At the same time, Warsh’s push to reduce the Fed’s holdings of Treasuries and other bonds has added further upward pressure on yields. These forces more than offset a softer inflation outlook tied to easing energy prices, as progress in restoring energy supplies from the Persian Gulf helped push energy costs lower.