US Treasuries: Yields near multi-decade highs – Deutsche Bank

Deutsche Bank analysts describe a renewed selloff in US Treasuries, with the 10-year yield around 5.25%, close to its 2007 peak and highest levels since 2002 if breached. Real yields are driving the move, and the curve is under pressure as markets price a more hawkish Federal Reserve path, including a high probability of an October rate hike.

Hawkish repricing lifts real yields

"With markets pricing in more rate hikes and energy prices up yet again, that put even more pressure on Treasuries across the curve. Among others, the 10yr yield (+7.6bps) moved up to 5.24% by the close, leaving it not far away from its 2007 closing peak of 5.29%."

"Elsewhere, yesterday also saw the 2yr yield (+7.9bps) rise to 4.93%, the highest since 2024, and the 30yr yield (+5.6bps) rose to a new post-2004 high of 5.55%. And once again, it was real yields driving most of the increase, with 10yr real yields (+7.1bps) reaching a new post-2008 high of 2.89%."

"This inflation momentum led investors to price in a more hawkish path for central banks, with growing expectations of a Fed rate hike at their next meeting. Indeed, as we go to press this morning, futures are pricing in a 73% chance of an October hike."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)