10-year Treasury yields fall while 2-year yields rise
TLT•The 10-year Treasury yield fell 2.29 basis points to 5.221%, while the 2-year yield rose 1.91 basis points to 4.81%. Traders priced a 21.6% chance of an October Fed rate hike and a 68% chance of a December increase.
1. Treasury yields diverge
Longer-dated US Treasury yields fell on Tuesday as investors monitored European bond markets, while the 2-year yield turned higher ahead of US inflation data due Wednesday. The 10-year yield touched its lowest level since October 2 after reaching a 24-year high last week.
2. Rates and Fed outlook
The 30-year Treasury yield fell 3.19 basis points to 5.5671%. The gap between 2- and 10-year yields was positive 40.9 basis points. Traders priced a 21.6% chance of an October Fed hike and a 68% chance of a 25-basis-point increase in December.
3. European market moves
France's 10-year yield fell as low as 4.8034%, from 4.8958% on Monday, as longer-dated euro zone yields also declined. Investors were awaiting September's US consumer price index report, while Fed Governor Christopher Waller said recent increases in US bond yields reflected stronger growth and large-scale AI investment rather than higher inflation expectations.
