US Treasury yields turned mixed on Friday as the long-end of the curve, the 20s and 30s, posted gains while the short-end and the belly of the yield curve retreated from multi-year high levels. The US 10-year Treasury yield holds firm at 5.20% after peaking at a 19-year high of 5.228%.
Long-end yields climb while Fed tightening bets keep 10-year near 5.20%
During the session, the 30-year bond yield rose to its highest level in 22 years. Hawkish commentary from Federal Reserve (Fed) officials and last week’s 25-basis-point rate hike were the two main catalysts that pushed US Treasury yields higher during the week.
The sudden shift from known doves, New York Fed John Williams (voter) and Philadelphia Fed Anna Paulson (voter in 2026), has increased the hawkish tilt on the FOMC board. Also, Fed Governor Michael Barr, acknowledging the need for further rate hikes on Wednesday, has almost cemented the case for a 25-basis-point rate hike towards the end of the year.
Money markets see a 64% chance of a Fed rate hike at the October 28 meeting, according to Prime Terminal. For the December meeting, the chances are higher at 92%.
Worldwide yields remain underpinned by high Oil prices as the US-Iran war continues, keeping inflationary pressures elevated.
Data-wise, US Consumer Sentiment deteriorated, with households seeing a leg up in inflation for one year from 4% to 4.6% and for a five-year period from 3.3% to 3.4%. Earlier, core capital goods increased 1.6% in August, boosted by the investment boom in AI.
The yield on the 30-year bond was last unchanged at 5.488%, after peaking at 5.5016%, the highest level since June 2004.
