US 2-Year Yields Hit 4.76% as Fed Hikes Odds Rise to 56%
Bond yields surged to multi-year highs while Asian tech stocks rose on AI demand. Brent crude held above $100 amid supply fears.
Key points
- US 2-year Treasury yields hit 4.7604%, the highest level since mid-2024.
- Brent crude oil held near $103.68 as global inventory timelines shortened to 5-10 weeks.
- Asian tech stocks rose, with South Korea's index gaining 1.1% on AI demand.
US 2-year Treasury yields reached 4.7604% after a 36 basis point spike in two weeks. This level marks the highest point since mid-2024, reflecting intense market tension.
Asian equity markets edged higher on Monday as artificial intelligence demand supported chipmakers. Brent crude oil eased slightly to $103.68 per barrel despite ongoing geopolitical risks.
Fed Hawkishness Drives Yield Surge
Market participants now price a 56% probability of a Federal Reserve rate hike in October. A year-end increase is widely considered a certainty following recent hawkish guidance.
Nominal consumer spending rose 6.3% year-over-year, well above the 5% threshold linked to high inflation. BofA analysts argue the Fed must restrain demand to stabilize prices.
Asian Tech Stocks Gain on AI
South Korea’s tech-heavy index gained 1.1% while Nasdaq futures added 0.4% in early trade. The MSCI Asia-Pacific index excluding Japan rose 0.3% amid thin trading volumes.
Japan’s Nikkei index was closed for the Silver Week holiday, though futures rose 0.5%. The dollar remained steady at 157.00 yen as investors watched for Bank of Japan intervention.
Oil Supply Risks Persist
Brent crude traded at $103.68 after dipping 0.2% from previous levels. US crude settled at $100.02 per barrel, holding just above the century mark.
CBA analysts estimate global oil inventories will deplete in 5 to 10 weeks due to pipeline closures. This timeline is significantly shorter than the 15 to 20 weeks estimated two weeks ago.
