FX.co ★ US 10-Year Treasury Yield Edges Up

The yield on the US 10-year Treasury note inched up to 4.63% on Thursday, as investors continued to weigh the outlook for monetary policy and the future path of interest rates. Markets are currently pricing in roughly a 55% probability of a Federal Reserve rate hike at the September meeting, down from about 68% on Monday. Attention is now focused on Friday’s US jobs report, which is expected to offer fresh insight into labour market conditions. Investors broadly anticipate that payroll growth will remain solid, even though ADP data released earlier this week showed a sharp slowdown in private-sector hiring in July. At the same time, announced job cuts have declined to their lowest level in two years.

Geopolitical risks also remain elevated. A durable agreement between the US and Iran appears unlikely in the near term, keeping upward pressure on energy prices and reinforcing concerns that higher commodity costs could fuel inflation. Such a scenario would increase pressure on the Fed to raise borrowing costs further.