Yields on US government bonds rise as traders expect Fed rate hike

The US bond market just flashed a signal that has Wall Street’s full attention. Treasury yields surged to levels not seen in years on September 10, driven by a potent combination of surging oil prices and fresh inflation data that landed hotter than expected. Traders responded by dramatically raising their bets that the Federal Reserve will hike interest rates at its September 15-16 meeting. The probability of a 25 basis point increase jumped to roughly 70%, up from around 60% before the latest market moves. The numbers tell the story The 10-year Treasury yield, the benchmark that influences everything from mortgage rates to corporate borrowing costs, climbed above 4.9%. Intraday, it touched as high as 4.92-4.93%, marking its highest level since late 2023. The 30-year yield was even more dramatic, reaching approximately 5.35%. That’s a number bond traders haven’t seen since 2007. On the shorter end of the curve, the 2-year yield broke above 4.5%, hitting its highest point since early 2024. Meanwhile, oil prices added fuel to the fire. West Texas Intermediate crude crossed $100 per barrel for the first time since May, while Brent crude traded in the $105-107 range. Escalating tensio...