Key Highlights

  • The 10-year Treasury yield rose more than 1 basis point to 5.11 percent Monday, with the 30-year at 5.448 percent.
  • The 2-year yield, which tracks Federal Reserve decisions, rose more than 2 basis points to 4.757 percent.
  • Wholesale prices rose 6.3 percent annually last month, the biggest jump since 2022, while consumer prices rose 3.7 percent.
  • Futures pricing shows an above 85 percent probability that the Fed leaves rates unchanged at its October 28 decision.

Yields Edge Higher

Treasury yields rose on Monday as investors continued to weigh the domestic inflation and interest rate backdrop against broader geopolitical developments. The yield on the 10-year Treasury rose more than 1 basis point to 5.11 percent. The 30-year bond yield was also more than 1 basis point higher at 5.448 percent, and the 2-year note yield was up more than 2 basis points at 4.757 percent.

One basis point equals 0.01 percentage points, or one hundredth of 1 percent. Yields and prices move in opposite directions, so a rising yield reflects falling bond prices.

Shorter-dated bills show the same upward slope across the curve. Quote pages showed the 1-month yield at 4.017 percent, the 3-month at 4.185 percent, the 6-month at 4.372 percent and the 1-year at 4.478 percent.

How Yields Reached These Levels

Treasury yields have spent weeks near their highest readings in years. In late September, the 10-year yield stood just below 5.2 percent, close to its highest level since 2007, and the 30-year was around 5.48 percent, near levels last seen in 2004. Quoted 10-year yields in mid-October ranged from about 5.05 percent to 5.12 percent.

Elevated oil prices and resilient economic data fed inflation concerns through that stretch, as investors assessed whether the central bank tightens policy further.

What Each Benchmark Tracks

The 10-year yield is the main benchmark for mortgages, auto loans and credit card debt, which links the bond market to household borrowing costs. The longer-dated 30-year yield often moves on geopolitical developments. The 2-year yield follows short-term Federal Reserve rate decisions more closely.

Inflation Data in Focus

Last week’s strong inflation data from the Bureau of Labor Statistics showed wholesale prices rising 6.3 percent annually last month, the biggest jump since 2022. Consumer prices rose 3.7 percent annually in September, beating estimates.

Those readings keep inflation concerns in front of bond investors even on days when yields move only slightly.

Oil and the Russian Supply Question

Energy prices fell on Monday as investors weighed the possibility of more Russian crude supply coming onto the market. West Texas Intermediate futures for November delivery were down 0.6 percent at USD 100.73 per barrel. Brent crude, the global oil price benchmark, dropped 1.6 percent to USD 108.13.

The possibility of more Russian supply follows the weekend waiver of new US sanctions on Russia, which has drawn the oil market’s attention.

The Fed and the Week Ahead

The Federal Reserve raised its federal funds target range by 25 basis points on September 16, to 3.75 percent to 4 percent, in its first increase in three years. The Fed’s next interest rate decision is due October 28. Traders are pricing an above 85 percent probability that the rate-setting Federal Open Market Committee leaves borrowing costs unchanged, based on futures pricing.

That pricing differs from late September, when markets priced about a 67 percent chance of an October increase, days after the first hike in three years.

Key domestic data releases scheduled for this week include September housing starts and new building permits, both due Tuesday from the Census Bureau. The releases arrive with the 10-year yield, the main benchmark for mortgage borrowing, above 5 percent.

The 2-year yield, the tenor that most closely follows Fed rate decisions, stands at 4.757 percent, above the top of the Fed’s 3.75 percent to 4 percent target range.