US 2-Year Yield Hits 4.76% as Tech Stocks Rally in Asia

US two-year Treasury yields reached 4.76 percent, their highest level since mid-2024. This sharp rise followed a severe sell-off in bond markets over the past two weeks. Investors now price in a 56 percent chance of a Federal Reserve rate hike in October.

Asian share markets edged higher on Monday as artificial intelligence demand supported chipmakers. The MSCI Asia-Pacific index excluding Japan gained 0.3 percent. South Korea’s tech-heavy index rose 1.1 percent while Japan remained closed for its Silver Week holiday.

Bond markets face tightening pressure

Hawkish guidance from the US Federal Reserve has driven the recent yield spike. Analysts at BofA note that tightening cycles are typically front-loaded. They expect two additional hikes in October and December to restrain demand.

Nominal consumer spending in the US is up 6.3 percent year over year. This figure exceeds the 5 percent level historically linked to high core inflation. The Fed aims to curb demand growth through further monetary tightening.

European debt risks rise

The risk premium on French debt hit its widest level since the euro zone crisis. This spike occurred on September 18 amid growing concerns over fiscal deficits. German debt may face similar pressure later this week.

Chancellor Friedrich Merz’s conservative party suffered its worst election results since 1949. This political shift adds uncertainty to European economic policy. The euro remained flat at 1.1477 US dollars despite these developments.

Oil prices stay above 100 dollars

Brent crude traded at 103.68 US dollars per barrel, down 0.2 percent. US crude dipped 0.3 percent to 100.02 dollars. These levels reflect ongoing geopolitical tensions in the Middle East region.

Analysts estimate global oil inventories will deplete in five to ten weeks. This timeline is shorter than previous estimates of 15 to 20 weeks. Saudi Arabia aims to restart flows through its damaged east-to-west pipeline.