Treasury Yields Retreat from Highs as Inflation Concerns Rise Amid Global Bond Selloff

US Treasury yields retreated from their highs on Tuesday after economic data was released. The Institute for Supply Management's manufacturing PMI fell to 54.6 in August, down from 55.6 in July. This decline sparked concerns about inflation, which have been exacerbated by the ongoing Iran war and its impact on oil prices.

The Labor Department's Job Openings and Labor Turnover Survey (JOLTS) report showed that job openings rose by 89,000 to 7.271 million in July, below the expected 7.300 million. This data is significant because it precedes the government's monthly payrolls report, which could influence expectations for the Federal Reserve's monetary policy.

The global bond selloff intensified as yields surged due to inflation worries and the outlook for monetary tightening. The yield on the benchmark US 10-year Treasury note rose to 4.77%, its highest level since January 14, 2025. Crude prices increased by about 2% following the renewed fighting in the Middle East.

Bill Merz, head of capital markets research and portfolio construction at U.S. Bank Wealth Management, stated that it's not the level of yields that's concerning but rather the trend and its potential impact on economic growth. He noted that inflation worries, corporate debt offerings, and longer-term yields are contributing to market uncertainty.