U.S. Treasury Yields Stabilize

By Emese Bartha

U.S. Treasury yields stabilized in Asian trade on Friday, as investors increasingly focus on the economic impact of high borrowing costs and away from inflation.

Long-dated Treasury yields continued hovering around the multiweek lows they fell to on Thursday. The 10-year Treasury yield last traded flat at 5.086%, while the 30-year yield was also stable at 5.430%, according to Tradeweb.

"U.S. Treasury yields may have reached levels where their elevated levels weigh on risk sentiment," said Jussi Hiljanen, chief rates strategist at SEB.

U.S. rates markets are grappling with two key questions--whether the market is pricing in too many interest-rate hikes over the next year and whether bond yields have peaked, Societe Generale rates strategists said in a note.

"It is hard to answer either question affirmatively in an environment where AI capex spending continues to dominate the narrative," the French bank's strategists said. "The economy is less sensitive to rate hikes, which could justify the market's pricing of hikes," they said.

Money markets fully price in three rate hikes by the Federal Reserve over the next 12 months, according to LSEG.

Inflation remains the pivotal variable for markets because it will influence both the direction of monetary policy and the path of government bond yields, said Laura Lake and Tim Crawmer, senior strategists at Payden & Rygel, in a note.

"With inflation proving persistent and the possibility of further Fed rate increases, near-term returns may depend more heavily on carry," the strategists said. "If inflation cools more decisively, bonds could deliver price appreciation in addition to income."

Write to Emese Bartha at emese.bartha@wsj.com

(END) Dow Jones Newswires

October 16, 2026 02:25 ET (06:25 GMT)