US Yields Soar as Traders Bet on Next Rate Hike
US Treasury yields rose sharply on Thursday as traders increased bets on another Federal Reserve interest rate hike in October. The 30-year bond yield reached its highest level since June 2004, with a rise of 7 basis points to 5.472 per cent.
The Fed's decision to raise rates last week for the first time since 2023 aimed to control inflation, but recent comments from Fed officials suggest additional rate hikes may be needed to curb high inflation.
Philadelphia Fed President Anna Paulson and New York Fed President John Williams joined Fed Governor Michael Barr in warning of further rate hikes. Traders now see a roughly 70 per cent chance of another increase when the US central bank next meets in October, according to CME Group's FedWatch Tool.
Poor auctions of 5-year notes on Wednesday and an auction of 7-year notes on Thursday contributed to the rise in yields. The market is reflecting concerns over high energy prices, which are driving inflation.