U.S. Treasury yields edged slightly higher this morning, with the 10-year note yield settling at 4.38%, while crude oil prices swung over 4% in early trading, driven by supply concerns and geopolitical tensions. Markets await key inflation data later this week.
- 10-year U.S. Treasury yield at 4.38%
- 2-year note yield unchanged at 4.61%
- Brent crude swung 3.8% in one day, ending at $86.12
- Copper down 2.3% to $8,420 per metric ton
- S&P GSCI up 1.9% on day, driven by agriculture and metals
- 62% probability of Fed rate hold in March per Fed funds futures
U.S. government bond yields showed minimal movement on Friday, with the 10-year Treasury note yield closing at 4.38%, up just 2 basis points from Thursday’s close. The 2-year note yield remained flat at 4.61%, indicating that short-term rate expectations are stabilizing despite ongoing macroeconomic uncertainty. Commodity markets, however, displayed heightened volatility. Brent crude futures surged to $89.45 per barrel before retreating, ultimately settling at $86.12—a 3.8% swing in less than 12 hours. The move followed reports of pipeline disruptions in the Middle East and renewed sanctions discussions involving major oil-producing nations. Meanwhile, copper prices dropped 2.3% to $8,420 per metric ton, reflecting concerns over slowing Chinese demand and weak industrial activity data from Asia. The divergence between fixed income and commodities underscores shifting market sentiment. While bond markets appear to be pricing in a pause in monetary tightening, investors are reacting to real-time supply risks in energy and raw materials. The S&P GSCI Commodity Index registered a 1.9% daily gain, led by gains in agricultural and metals sectors, despite broad declines in energy. Market participants are now turning their attention to the upcoming U.S. CPI report due Tuesday, which could influence Federal Reserve policy expectations for the remainder of the quarter. Financial instruments tied to Fed funds futures suggest a 62% probability of a rate hold in March, up from 54% last week.