US 10-Year Treasury Yield Hits 19-Month High Amid Rising Inflation Concerns

The US 10-year Treasury yield reached its highest level in 19 months on August 31, rising to 4.75%. This spike is attributed to growing concerns about inflation, driven by increasing international oil prices and the possibility of a rate hike by the Federal Reserve (Fed).

The surge in long-term yields was accompanied by a sell-off across all maturities, with the 5-year Treasury yield also hitting its highest level since early last year. Meanwhile, the 30-year yield traded up 5 basis points to 5.26%.

The international oil price increase of nearly 3% is partly due to President Donald Trump's hint at additional strikes against Iran. This development has contributed to the rising inflation concerns and subsequent interest rate hike expectations.

As a result, the probability of an interest rate hike by the Fed at its meeting on September 16 has increased significantly, with the Chicago Mercantile Exchange (CME) FedWatch citing a 64.2% chance, up from 41.4% just a week earlier.