Treasury Yields Soar to Highest Level Since 2007 Amid Fed Rate Hike Expectations

US Treasury yields have surged to their highest level since 2007, reaching 5.025% on Tuesday.

This sharp movement in bond prices comes ahead of the Federal Reserve's two-day meeting, which began on Tuesday.

The yield on the 10-year Treasury note rose by more than 6 basis points, with the 30-year Treasury bond experiencing a larger increase of over 5 basis points to 5.384%.

Market expectations are high that the Federal Reserve will raise interest rates by 25 basis points, with a probability exceeding 92% according to the CME Group's FedWatch tool.

Jonathan Liang, Chief Investment Officer for Fixed Income and Currencies at Standard Chartered, explained that 10-year Treasury bonds are highly sensitive to inflation expectations, which will likely persist as long as inflation indicators remain above target levels.