US Treasury yields climbed to levels not seen in over two decades on Monday, as investors digested resilient services sector data and positioned for the Federal Reserve's September meeting minutes due Wednesday. The benchmark 10-year yield rose 9 basis points to 5.349%, the highest since April 2002, while the 30-year yield advanced more than seven basis points to 5.703%, its strongest since May 2002.
The move followed the Institute for Supply Management's services PMI, which came in at 54.9 for September, slightly below August's pace but broadly in line with expectations. The prices paid component jumped 1.4 points to 74, pushing its 12-month average to the highest level since March 2023, a signal that inflation pressures in the services sector remain elevated.
Despite the yield surge, market expectations for a Fed rate hike at the October meeting have softened following a weaker-than-expected September jobs report. According to the CME FedWatch tool, traders now price in an 82% probability that the central bank will hold rates steady at its next meeting. The Fed's September meeting minutes, due Wednesday, will be scrutinized for further clues on the policy path.
Oil prices retreat as supply outlook improves
Oil prices fell on Monday as Middle Eastern crude exports rose above pre-war levels on four of the seven days in the final week of September, according to shipping data. Brent crude settled 2.36% lower at $99.84 a barrel, while US West Texas Intermediate dropped 2.41% to $88.91.
The G7 also agreed to release 100 million barrels of diesel and crude from emergency reserves and pledged to avoid energy export restrictions, adding to the supply relief. However, uncertainty remains over how much of the pledged supply will come from the International Energy Agency-coordinated 400 million-barrel emergency release announced in March.
The broader supply backdrop remains tight. Saudi Aramco CEO Amin Nasser warned that crude and refined fuel supplies could stay stretched, with global stockpiles potentially taking two years to replenish after emergency withdrawals. US Strategic Petroleum Reserve inventories fell to 283 million barrels last week, the lowest level since October 1982.
Gold steady as October hike bets fade
Gold prices were little changed, with spot gold up 0.02% at $4,143.31 an ounce, while US gold futures for December delivery settled 0.17% higher at $4,169.70. A stronger dollar and elevated Treasury yields weighed on the precious metal, though reduced expectations for a Fed rate hike this month provided some support.
Traders now price a 22% probability of an October increase, down from about 70% a week earlier, while the chance of a December hike remains at 84%. Metals Focus projects gold to reach new record highs in 2027, with an average price forecast of $5,330 an ounce next year.
Bitcoin consolidates near recent highs
Bitcoin was up 0.2% in the last 24 hours, trading near $85,680, as the cryptocurrency consolidated after entering October with gains. Technical indicators, however, show cooling short-term momentum, with the relative strength index around 41 and the MACD below its signal and zero lines.
Corporate treasury activity continues to support Bitcoin's broader backdrop. Strategy acquired 334 BTC for $28.7 million, while Metaplanet increased its holdings to 44,000 BTC after adding 1,000 BTC during the third quarter. Bitcoin ETF flows remain positive, with $164.22 million in net inflows over one day and $226.41 million over seven days, according to CoinGlass data.
The market-implied year-end high on Kalshi rose to $95,000, and Bitcoin could potentially test $90,000 if the current positive setup persists. Meanwhile, proposed CFTC crypto market rules could provide a clearer federal framework for Bitcoin, Ethereum and registered crypto exchanges.
This article is for informational purposes only and does not constitute financial advice.
