FX.co ★ US Treasury Yields Tick Higher, but Post Weekly Decline

The US 10-year Treasury yield inched up to 5.11% on Friday after falling 11 bps in the previous session, leaving it about 14 bps lower for the week. The benchmark yield also remained below the peaks hit earlier this month, which were the highest levels since 2002.

Investors continued to evaluate the Federal Reserve’s policy outlook, with remarks from Chair Warsh at the IMF summit reinforcing expectations that rates will be left unchanged this month. Warsh declined to indicate whether an additional rate hike is being considered, but noted that hotter-than-expected inflation data had not changed his overall view of the US economy.

Futures markets now imply roughly an 85% probability that the Fed will keep rates on hold in October, while pricing in nearly a 77% chance of a 25 bps increase in December. The week has been volatile for markets, as both US CPI and PPI data surprised to the upside, and a pullback from AI-related trades spurred a broader flight to safety.