Treasury Yields Soar Amid Fed Rate-Hike Bets, SNB Holds Steady

US Treasury bond yields have reached multi-year highs, driven by increasing expectations of further Federal Reserve interest rate hikes. The benchmark 10-year government bond yield rose to 5.21%, a level not seen since June 2007, while the 2-year Treasury yield advanced to 4.93%, its highest mark since May 2024.

Policymakers are growing concerned about inflationary pressures stemming from capital investments in artificial intelligence projects and ongoing tariffs that continue to elevate costs across the business environment. The market-implied probability of a 25-basis-point rate increase at the October meeting stands at 67%, with a 56% chance of another hike at the December meeting.

The Swiss National Bank (SNB) held its benchmark interest rate steady at 0%, aligning with market expectations. Despite significant uncertainty due to the US-Iran conflict, the SNB deemed it appropriate to maintain rates unchanged, citing price stability and economic resilience in Switzerland.