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US 10-year yield tests 4.81%, raising the odds of 5%

The 10-year moved higher for two separate drivers, with Jackson Hole repricing Fed timing at the front end and renewed US-Iran escalation lifting the long end through persistent inflation concerns.

Reported · Written up by our desk · Major Pairs

The US 10-year Treasury yield has climbed above 4.75%, hovering around 4.76% to 4.78% Tuesday morning, after reaching 4.81% as markets weigh whether 5% is the next threshold. Action Forex notes that 4.81% is the level that determines whether the market starts treating 5% as a realistic question.

The move reflects two different forces across the maturity curve. After Warsh’s Jackson Hole speech, traders repriced near term Fed timing, sending the US 2-year yield up by about 13 basis points, while the 10-year rose roughly 5 basis points and the 30-year added only 1 to 2 basis points.

In contrast, the more recent rise has been led by the long end. Action Forex reports that renewed US-Iran escalation has pushed oil higher, with Brent climbing above $91, raising renewed concern that higher energy costs could last longer, even as the immediate focus shifts from the timing of September hikes to how persistent inflation pressures may be.

Action Forex also links the front versus long end dynamics to changing expectations for policy, saying September hike odds moved from below 40% before Warsh to above 60% after the speech, while this week’s pattern has the long end doing more of the work.

Latest closeBrent $88.80 ▼0.6%

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