The yield on the US 10-year Treasury note climbed back to 5% on Friday, partially reversing a 17 bps decline in the previous session — the largest single-day drop in more than a year. Despite this modest rebound, risk appetite remained subdued as oil prices continued to rise on mounting fears of an escalation of conflict in the Middle East, while the US midterm elections loom less than two weeks away.
At the same time, persistent worries about substantial AI-related capital expenditure continued to pressure market sentiment. Looking ahead, the Federal Reserve will announce its monetary policy decision next week, with futures pricing in roughly a 91% probability that rates will be left unchanged. By contrast, the market-implied odds of a 25 bps rate increase in December are hovering around 76%.