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US 30-year yield tops 5.31% as Fed hike odds cool
The 30-year rate reached a 19-year high above 5.31%, even as September Fed hike probability fell and recent inflation data softened.
US 30-year Treasury yields climbed above 5.31%, the highest level in 19 years, while the 10-year yield was around 4.73%, according to Action Forex.
The move came alongside Brent pushing through $90 as US-Iran tensions intensified, with the article noting that Treasury yields have often tracked crude during Iran-related swings this year.
Action Forex said oil likely explains some of the timing, as each energy escalation has given investors another reason to sell duration, but it may not fully explain the yield level given that markets have been cutting Fed hike expectations and recent CPI and PPI readings have softened.
The piece pointed to longer-term drivers for the long end, citing uncertainty around the Fed’s inflation-control credibility, structural risk pricing that the Fed funds rate cannot quickly resolve, and a fiscal backdrop, including a CBO update that lifted the annual deficit estimate to $2.1 trillion, about $200 billion higher than an earlier projection.
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