The US 10-year Treasury yield pushed above 4.75% in late August, and the market consensus is that it’s just getting started. Two-thirds of surveyed market participants now expect the benchmark yield to breach 5% before the year is out, a level that would mark the highest since well before the global financial crisis.
The 30-year yield has already crossed that threshold. It’s been trading consistently above 5%, with recent prints landing between 5.18% and 5.31%, territory it hasn’t occupied since 2007.
Oil, inflation, and the Jackson Hole effect
Oil prices spiking toward the $90 to $100 per barrel range have reignited inflation fears. Geopolitical tensions, particularly involving the US and Iran, have been the primary accelerant.
Federal Reserve Chair Kevin Warsh didn’t exactly calm nerves at the Jackson Hole symposium. His speech carried a distinctly hawkish tone, and markets responded accordingly. According to CME FedWatch data, the market-implied probability of a rate hike at the September meeting jumped to roughly 55% to 60% in the aftermath.
