Barr Backs Further Rate Hikes Amid Rising US Business Activity
US Federal Reserve Governor Michael Barr has made a strong case for further interest rate hikes to combat inflation, saying that the risks of getting inflation back to 2% have grown while the risks to jobs have eased. This came after S&P Global's flash Purchasing Managers Index (PMI) surveys showed higher-than-expected business activity in the US, with measures of prices rising to their highest level since October 2022.
The Brent Crude Oil price has risen above $100 a barrel for the first time in five days following Iranian President Pezeshkian's statement at the UN that his country would not negotiate under pressure. Rate futures now give an increase on October 28 about a 73% chance, while the 10-year US Treasury yield is trading just below 5.10%, its highest level since July.
The Fed raised interest rates on September 16, but this time around, the 10-year yield has risen more in response to Barr's comments and the PMI survey results than it did after the rate hike itself. The two-year and 30-year yields are also higher alongside the 10-year.