Treasury yields climb, but 10-year holds under 5% as AI jitters linger
TLT•The 10-year Treasury yield rose 3.7 basis points to 4.99% on Friday after its biggest one-day drop in nearly four years, while remaining down about 11 basis points for the week. The flash US Composite PMI eased to 57.6 from 58.4 in September.
1. Yields rise after sharp drop
The 10-year Treasury yield rose 3.7 basis points to 4.99%, a day after falling 19.3 basis points. It was down about 11 basis points for the week and on track for a third straight weekly decline. The 30-year yield added 2.9 basis points to 5.316%, while the two-year yield climbed 5.5 basis points to 4.69%.
2. Economic data and rate outlook
S&P Global’s flash US Composite PMI Output Index slipped to 57.6 from 58.4 in September, but remained above the 50 threshold for expansion. Market-implied odds of a Federal Reserve rate increase of at least 25 basis points next week fell to 9.4%, from 15.5% a week earlier and 70.9% a month earlier.
3. Inflation concerns persist
Investors have shifted toward government debt amid concerns about the sustainability of the AI-related stock rally, even as economic data point to price pressures and oil prices have risen above $100 a barrel. The five-year TIPS breakeven rate was at 2.456%, on track for its highest close since September 10.
