The front end inched higher as inflation worries lingered. The 2-year Treasury yield increased by just over 2 basis points to 4.423%. The 10-year inched up by under 1 basis point to 4.808%, while the 30-year fell by a bit more than 1 basis point to 5.251%. One basis point is 0.01%, and when bond prices fall, yields rise.
Snapshot levels across the curve showed: U.S. 10-year at 4.80% (down 0.004), 1-month at 3.723% (down 0.001), 1-year at 4.148% (up 0.002), 2-year at 4.404% (up 0.006), 30-year at 5.248% (down 0.016), 3-month at 3.895% (unchanged), and 6-month at 4.028% (unchanged).
Brent crude futures rose back over $100 per barrel, a level last seen in late July, while U.S. West Texas Intermediate added more than 2% to about $95. The climb comes as tensions in the Middle East remain elevated, with hostilities continuing between the U.S. and Iran. On Wednesday, Tehran stated that its forces targeted two American ships together with eight oil tankers in the Gulf, framing it as retaliation for the U.S. destruction of five Iranian crude oil tankers.
Writing on Wednesday, Marc Ostwald of London's ADM Investor Services, where he serves as chief economist and global strategist, wrote, "Rates and FX markets are facing an ever more complex environment, with the risks of high energy prices spilling over more broadly in inflation terms, but in turn also increasing the risks of growing headwinds to growth, and demand destruction."
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Investors are awaiting a run of U.S. data to assess the economy's resilience while the war continues and energy supplies remain constrained. August producer price index figures arrive Thursday, followed by the consumer price index reading on Friday. For anyone tracking the ripple effects, these updates help explain why yields are wobbling and where the broader mood might go next.
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