Yields elevated as inflation fears keep markets on edge
TLT•U.S. 10-year Treasury yields reached 5.1497%, their highest since 2007, before retreating to 5.112%, while futures priced 66% odds of a Fed rate hike next month. Oil rose about 2% as U.S.-Iran talks showed little progress.
1. Treasury yields remain high
Longer-dated U.S. Treasury yields retreated from earlier peaks but remained elevated as investors weighed renewed inflation fears and the possibility of further central bank rate hikes. The 10-year yield earlier reached 5.1497%, its highest since 2007, while the 30-year yield peaked at 5.4461%, its highest since 2004.
2. Rate hike odds climb
Fed funds futures priced 66% odds of a Fed hike next month, up from around 53% before U.S. business activity data was released Wednesday. The Dow fell 0.37%, the S&P 500 dropped 0.23% and the Nasdaq declined 0.51%. Investors were also watching Thursday’s $44 billion auction of seven-year Treasury notes after weak demand at Wednesday’s $70 billion five-year debt sale.
3. Oil and trade tensions
Oil prices rose about 2% as U.S.-Iran diplomatic talks showed little sign of progress, while investors weighed uncertainty over a potential U.S. ban on diesel exports. Treasury Secretary Scott Bessent said the U.S. and China had reached a deal on an initial two-month extension of their trade truce.
