U.S. Treasury yields rise with Middle East talks and rate hike bets in focus
TLT•The 10-year Treasury yield rose 4.88 basis points to 5.23% after reaching 5.2741%, while traders raised the probability of an October 25-basis-point Fed hike to 68% from 64%. Yields pared some gains as oil futures eased on hopes for renewed Middle East negotiations.
1. Yields reach multiyear highs
Treasury yields slowed their advance after reaching multiyear highs, as oil futures pared gains. The 30-year yield had reached its highest level since May 2004, the 10-year yield its highest since June 2007, and the 2-year yield its highest since May 2024.
2. Rate hike bets increase
Traders raised the probability of a 25-basis-point Fed rate hike in October to 68% from 64% on Friday and added to bets on a December hike, CME Group's FedWatch tool showed. The 30-year yield rose 5.36 basis points to 5.5556%, while the 2-year yield gained 4.99 basis points to 4.914%.
3. Talks and inflation concerns
An official said Qatari mediators were likely to hold separate talks with Iran's foreign minister and the U.S. side on Monday or Tuesday. Fed Governor Lisa Cook said she expects continued inflationary pressure in coming months from AI-related demand and higher oil prices. Investors were awaiting the August Personal Consumption Expenditures report on Wednesday and September non-farm payrolls report on Friday.
