U.S. Treasury Yields Take a Breather After Hitting New Highs Amid Inflation Concerns

[Financial News]  U.S. Treasury yields, which hit fresh highs the previous day amid persistent inflationary pressures, edged lower early in trading on the 29th (local time), taking a breather.
According to CNBC, the U.S. 10-year Treasury yield, which serves as a benchmark for mortgage, auto loan and credit card rates, was unchanged at 5.238%. The 30-year Treasury yield, which is sensitive to geopolitical developments, fell 1 basis point (1 bp = 0.01 percentage point) to 5.551%.
By contrast, the 2-year Treasury yield, which reflects expectations for monetary policy from the U.S. central bank, the Federal Reserve (Fed), rose 1 basis point to 4.9389%. Bond yields and prices move in opposite directions.
On the previous day, the 28th, 10-year and 30-year yields each surged 5 basis points as inflation concerns resurfaced, while the 2-year yield also rose 6 basis points.
Military tensions in the Middle East have been driving borrowing costs to their highest levels in years. According to foreign media outlets including Al Jazeera, the United States and Iran have entered indirect negotiations through mediators to resolve the conflict in the Middle East. However, energy prices remain under sustained pressure as the war enters its seventh month.
With rising energy prices and growing government debt fueling inflation concerns, market expectations are strengthening that the Fed will raise interest rates further to rein in inflation.
According to CME FedWatch, market participants are pricing in a more than 72% probability that the Fed will raise its policy rate again at the Federal Open Market Committee (FOMC) meeting scheduled for October. At its meeting earlier this month, the Fed raised the policy rate by 25 basis points in a unanimous 12-0 vote.
Meanwhile, the market is closely watching the U.S. economic picture, with a series of major economic indicators due this week, including the August Job Openings and Labor Turnover Survey (JOLTS), the core personal consumption expenditures (PCE) price index, a revised quarterly gross domestic product (GDP) figure, monthly nonfarm payrolls and the unemployment rate.

[email protected] Yoon Jae-jun Reporter