US 10-Year Treasury Yield Eases to 4.97 Percent on September 16 After Hitting 5.04 Percent 19-Year High on Tuesday as Markets Await Fed Decision

The US 10-year Treasury yield traded at 4.97 percent on Wednesday September 16, down more than 2 basis points from the session open, after hitting 5.04 percent on Tuesday, the highest level since July 2007, according to CNBC, Trading Economics, and Bloomberg. The 2-year Treasury note yield dropped more than 3 basis points to 4.627 percent, while the 30-year Treasury bond yield fell more than 1 basis point to 5.348 percent. Yields pulled back as investors awaited the Federal Reserve's 2 PM ET monetary policy decision, with 92 percent odds priced for a quarter-point rate hike to 3.75-4.00 percent, the first increase since 2023. Tuesday's spike to 5.04 percent reflected intensifying bond market pressure from surging oil prices, mounting inflation risks, and growing fiscal concerns, with markets pricing roughly 92 percent probability of a Fed hike on Wednesday. Energy prices extended gains as Saudi Arabia's East-West pipeline remained shut following September 11 drone attacks, while diplomatic efforts to reopen the Strait of Hormuz showed no progress. Long-term yields have also been driven higher by surging corporate debt issuance from AI companies, limiting capital allocation by primary dealers and financial institutions. The Fed's decision and Chair Kevin Warsh's 2:30 PM ET press conference will be closely scrutinized for signals on further monetary tightening and the committee's outlook for interest rates through year-end.