The yield on the 10-year US Treasury note remained above 5.1% on Friday, hovering near a three-week high amid mounting expectations of a more aggressive pace of Federal Reserve tightening. The move followed stronger-than-expected US consumer inflation data and a series of hawkish comments from Fed officials, with some policymakers indicating that a larger 50-basis-point rate hike may be necessary to rein in price pressures.
Futures markets are currently pricing in roughly an 85% probability of a 25-basis-point increase in December, and about a 15% chance of a larger 50-basis-point move. Investors are also increasingly expecting additional rate hikes next year. Market participants are now looking to US producer price index (PPI) data for further clues on underlying inflation dynamics.
At the same time, oil prices rebounded after President Donald Trump stated that the United States no longer needs a deal with Iran, a development that added to upward pressure on Treasury yields.