US Treasury Yields Turn Mixed as 30-Year Bond Hits 22-Year High

US Treasury yields moved in mixed directions on Friday, with the 30-year bond yield reaching its highest level in 22 years at 5.5016%, while the 10-year yield remained near 5.20%. Hawkish Federal Reserve commentary, a prior week rate hike, elevated inflation expectations, and high oil prices drove the moves. Money markets now price a 64% chance of a rate hike at the October 28 FOMC meeting and a 92% probability for December.

On Friday, longer-dated Treasury securities — the 20-year and 30-year maturities — edged higher, while shorter-duration notes and mid-curve instruments pulled back to levels not seen in several years. The US 10-year Treasury yield stabilised around 5.20%, having earlier touched 5.228%, its highest level in nearly two decades. The 30-year Treasury yield climbed to a 22-year peak during the trading session. Two factors drove US Treasury yields upward over the course of the week: cautious remarks from Federal Reserve officials signalling a tighter monetary stance, and the 25-basis-point rate increase implemented the previous week. A repositioning among policymakers at the New York Fed, represented by John Williams, and the Philadelphia Fed, represented by Anna Paulson — both voting members — has moved the FOMC's overall policy stance in a more restrictive direction. Federal Reserve Governor Michael Barr has indicated that borrowing costs will likely rise by 25 basis points before the close of the year, with his comments widely seen as reinforcing expectations for another rate adjustment. Traders in money markets are pricing in a 64% probability of a Fed rate increase at the 28 October meeting, based on Prime Terminal data. Odds of a rate adjustment at the gathering scheduled for December stand at 92%. Elevated oil prices continue to support bond yields globally, sustaining upward pressure on inflation. Household confidence in the economy weakened, with near-term inflation expectations climbing to 4.6% from 4.0% and longer-term projections edging up from 3.3% to 3.4%. Orders for core capital goods rose 1.6% in August, driven partly by expanding investment in artificial intelligence technologies. The 30-year Treasury bond held steady at a yield of 5.488%, having touched an intraday high of 5.5016% — a rate not seen since June 2004.

US Treasury Yields Turn Mixed as 30-Year Bond Hits 22-Year High

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US Treasury Yields Turn Mixed as 30-Year Bond Hits 22-Year High

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