US Treasury Yields Hit Multi-Year Highs Amid Inflation Concerns
US Treasury yields climbed to multi-year highs early this week, fueled by rising inflation concerns. The 10-year yield surpassed 5.30%, while the 30-year yield also reached elevated levels. This surge came despite a slower pace of growth in the services sector, as indicated by the ISM Services PMI, which fell slightly to 54.9 from 55.4. However, the prices paid sub-index spiked to 74.0, signaling higher input costs for businesses.
The rise in yields was further amplified by France's fiscal challenges, which heightened investor anxieties about global borrowing costs. Meanwhile, oil prices took a dip, with West Texas Intermediate (WTI) crude dropping over 2% to $89.29 on Monday. This decline followed the G7's decision to release more than 100 million barrels of crude and diesel, easing supply pressures.
Last Friday, US yields had cooled slightly after a weaker-than-expected jobs report, which showed only 29,000 new jobs created, well below the forecasted 90,000. This data led to a shift in market expectations, with the probability of a Federal Reserve interest rate hike in October dropping to 76%. Traders are now focusing on upcoming economic indicators, including the ADP Employment Change figures and the release of the FOMC meeting minutes.