U.S. Treasury yields fell in early trading on Tuesday, after reaching new highs on the previous trading day due to ongoing concerns about inflationary pressures.
The yield on 10-year U.S. Treasury bonds – a key benchmark for mortgage loans, auto loans, and credit card debt – remained flat at 5.238%.
The yield on 30-year government bonds is usually more sensitive to geopolitical developments, dropping by 1 basis point to 5.551%.
The yield on 2-year Treasury bonds generally moves in tandem with the Federal Reserve's short-term interest rate decisions, rising by 1 basis point to 4.9389%.
1 basis point is equal to 0.01%, and the yield rate moves in the opposite direction to the price trend.
On Monday, the yield on 10-year benchmark government bonds and the yield on longer-term 3-year government bonds both jumped by 5 basis points, while the yield on 2-year bonds rose by 6 basis points.
According to Al Jazeera, the United States and Iran have recently held talks with mediators respectively, with the aim of resolving the ongoing conflicts in the Middle East. The recent surge in borrowing costs has pushed yields to multi-year highs.
This seven-month-long war continues to put pressure on energy prices and drives investors to expect the Federal Reserve to raise interest rates further in order to help contain the out-of-control rise in prices; meanwhile, the increase in government debt has also exacerbated this situation.
CME Group FedWatch tools show that traders are currently betting that the probability of the Federal Reserve raising interest rates again at its next meeting in October is over 72%. Previously, earlier this month, the Federal Open Market Committee (FOMC) raised the benchmark interest rate by 25 basis points with a vote of 12 in favor and 0 against.
At the same time, a series of economic data to be released this week – including the August JOLTS job vacancy report, the core PCE price index, quarterly GDP data, as well as monthly non-farm employment and unemployment rates – will provide new insights into the domestic economic situation in the United States.
