The retreat followed Monday’s climb to 5.34% on the 10-year and 5.70% on the 30-year, their highest levels since 2002. Resilient growth, AI investment and persistent inflation pressured bonds, with the ISM Services Prices Paid index reaching 74.0, its highest since July 2022. Markets on Monday priced roughly a 25% chance of an October Fed rate hike and a full 25 basis point increase by December.
The US deficit remains near 6% of GDP. Bessent has downplayed the rise in yields as part of a global trend rather than a shift away from US debt. “We’re not seeing people selling treasuries to buy German bonds or Japanese bonds,” he said in an Axios interview published Saturday.