US Treasury yields for 10-year, 30-year hit 24-year highs, two-year Treasury yield down. What does this mean for US Fed Interest Rate, check experts predictions

US Treasury yields 10-and 30-year yields jumped to new 24-year highs as recent negative sentiment in the bond market prevailed and investors weighed the outlook for higher rates. However, the two-year US Treasury yield was down on Monday.

The yield on the benchmark US 10-year Treasury note was up 3.4 basis points at 5.311 per cent. The yield on the 30-year bond was up 3.2 bps at 5.662 per cent. The 10-year rose as high as 5.3493 per cent and the 30-year rose as high as 5.7029 per cent, both fresh 24-year highs. The two-year US Treasury yield, which typically moves in step with interest rate expectations for the Fed, was last down 0.4 basis points at 4.821 per cent.

A closely watched part of the US Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as an indicator of economic expectations, was at 48.8 bps. It earlier reached 49.70 bps, its steepest since August 21.


US Bonds Yields

US yields rose on Monday even as oil prices fell. Oil fell after crude exports from the Middle East increased and the Group of Seven nations pledged to boost supplies.

Yields held higher after economic data suggested inflation could remain elevated into 2027. An Institute for Supply Management report showed US services sector activity slowed in September, while strong domestic demand stretched supply chains and pushed a measure of prices paid by businesses for inputs to its highest level in more than four years.

"There wasn't anything there to push yields in the other direction," said Jim Barnes, director of fixed income at Bryn Mawr Trust.

Overseas fiscal concerns also continued to weigh on the US bond market, he said. "It's that overall theme that's been hanging over the bond market -- fiscal concerns around the globe with various developed markets," he said. "When it pops up somewhere... it starts to influence bond markets around the globe and you have some of that today."

Global Bonds Sell Off

Bonds have been selling off across the globe, driving yields higher, amid concern over government debt in France and elsewhere and worries over higher inflation and oil prices tied to the US-Israeli war with Iran. Yields in Spain were higher on Monday after Spanish Prime Minister Pedro Sanchez called a snap election for November 29 in an attempt to strengthen his mandate after parliament rejected the government's housing decrees last week amid protests.

US Fed Interest Rate

Chances of a Federal Reserve interest rate hike this month were diminished by recent cooler-than-expected inflation readings for July and August as well as a slowdown in US nonfarm payroll growth in September.

On Friday, US Treasury yields reversed their earlier declines despite the weaker-than-expected jobs report for September.

Traders were last pricing in a roughly 76 per cent probability that rates would be unchanged at the Fed's October 27-28 meeting, according to CME Group's FedWatch Tool. Traders saw nearly a 90 per cent chance of a rate hike in December.

Last month, the Fed raised rates for the first time since 2023 in an effort to control inflation. Investors also will be watching upcoming Treasury auctions, including a 3-year auction on Tuesday. Weak demand at auctions last month added to the recent selloff in bonds.

The breakeven rate on five-year US Treasury Inflation-Protected Securities (TIPS) was last at 2.378 per cent. The 10-year TIPS breakeven rate was last at 2.359 per cent, indicating the market sees inflation averaging about 2.4 per cent a year for the next decade.