Context:

U.S. Treasury yields edged up as recent selling pressure moderated amid hawkish Fed commentary and stronger data, with the 10-year at about 5.17% after a peak since June 2007, while the 30-year held near 5.46% after reaching multi-decade highs. The moves come against a backdrop of a global bond rout, though eurozone and Japanese yields eased on Friday. Market pricing shows roughly a two-thirds chance of a rate increase in October as investors weigh inflation risks against debt dynamics and swap spread pressures. Investors will parse upcoming U.S. data, including the University of Michigan sentiment gauge and durable goods reports, for guidance on future policy actions. The outlook points to continued pressure in Treasuries amid persistent inflation-linked concerns and debt dynamics.

Dive Deeper:

• The 10-year Treasury yield rose to about 5.17% on Friday, after hitting its highest level since June 2007 on the prior day, reflecting renewed selling pressure tied to hawkish commentary and strong data.

• The 30-year Treasury yield was little changed at around 5.463% after surging to levels not seen since 2004, signaling a broad but uneven move across maturities.

• Two-year yields remained near 4.899%, indicating a steady front end despite the backdrop of higher-for-longer expectations.

• Investors noted a global bond selloff with gains in German bunds and UK gilts, while eurozone and Japanese yields edged lower on Friday, showing divergent regional dynamics.

• Fed commentary from Governor Michael Barr suggesting further policy adjustments to bring inflation to target contributed to the elevated yield environment, reinforcing rate-hike expectations.

• Oil prices staying elevated and the PMI data at its strongest in over four years added to inflation risk concerns and pricing of tighter monetary policy.

• The CME FedWatch tool indicated about a 71% chance of a rate increase in October, signaling markets are still aligning with a tighter policy path despite some relief in funding pressures.