FX.co ★ Treasury Yields Hold at 2-Decade Highs

The yield on the US 10-year Treasury note hovered just below 5.2% on Friday, staying close to its highest level since 2007, while the 30-year yield traded around 5.48%, its highest since 2004. Borrowing costs have risen as elevated oil prices and resilient US economic data have stoked inflation concerns, reinforcing expectations that the Federal Reserve could tighten policy further.

Futures markets are now pricing in roughly a 67% probability of an additional Fed rate hike in October, after policymakers delivered their first interest rate increase in three years last week.

In the meantime, the US Treasury Department on Thursday bought back $4.078 billion of 20- and 30-year bonds under its ongoing buyback program. The take-up fell short of the $10.4678 billion in bonds offered into the operation and was also below the $6 billion in purchases the Treasury had indicated it planned to make.

Investors now turn their attention to the University of Michigan consumer sentiment index and the latest durable goods orders data, both due Friday, for additional insight into the underlying strength of the US economy.