Treasury Yields Hold Near Multi-Year Highs Ahead of Fed Decision

U.S. Treasury yields hovered near multi-year highs on Monday morning as investors awaited a crucial Federal Reserve monetary policy decision amidst an intensifying energy crisis in the Middle East.

The benchmark 10-year Treasury yield consolidated at 4.978%, just below the psychologically critical 5% threshold after briefly breaching it on Friday.

Policy-sensitive yields, which suffered significant price declines recently, ticked up to 4.643%. This follows a severe sell-off in fixed-income markets as traders rapidly priced out an autumn policy pause and built in aggressive expectations for near-term interest rate hikes.

Central bank interest rate decisions dominate global debt bourses this week, with the U.S. Federal Reserve expected to raise its benchmark borrowing rate by 25 basis points at its September 15-16 meeting, according to swaps traders who are pricing in an 86% probability of a hike.