The yield on the US 10-year Treasury note held steady at 4.09% on Tuesday, after surging in the previous session to its highest level in about two weeks. Global bond markets were rattled on Monday after the Governor of the Bank of Japan hinted at a potential interest rate hike this month. Higher rates in Japan could encourage domestic investors to retain capital in local bonds rather than in higher-yielding assets abroad, including Treasuries. Adding to the upward pressure on yields was a wave of new corporate bond offerings, including from Merck & Co. Meanwhile, investors now await Federal Reserve Chair Jerome Powell’s remarks later in the day for further guidance on the central bank’s policy outlook. Data released on Monday showed the US manufacturing slump deepened, keeping expectations for a 25bps rate cut elevated. Current market pricing reflects an 88% probability of such a move.
