Treasury yields are broadly flat as investors anticipate FOMC minutes

• The 10-year Treasury yield traded at 5.302% and the 30-year at 5.665%, both near 24-year highs reached on Monday following ISM services data showing cooling growth but elevated prices
• The ISM services PMI rose to 54.9 in September while the price index jumped 1.4 points to 74, contributing to yield increases
• Traders are pricing in a 78% probability that the Federal Reserve will hold rates steady at its next meeting, according to market expectations

Summary: Treasury Yields Hold Steady Ahead of FOMC Minutes Release

U.S. Treasury yields remained broadly flat Tuesday morning following Monday's surge to multi-decade highs, as investors awaited the Federal Reserve's FOMC meeting minutes scheduled for Wednesday release.

Key Yield Movements:

• 10-year Treasury: 5.301% (down 1 basis point), after hitting its highest level since April 2002 on Monday
• 30-year bond: 5.656% (down less than 1 basis point), reaching levels not seen since May 2002
• 2-year note: 4.818% (down 1 basis point)

Both the 10-year and 30-year yields recorded 24-year highs during Monday's session.

Market Drivers:

Monday's yield surge followed Institute for Supply Management (ISM) data showing mixed signals in the services sector. The services PMI rose to 54.9 in September, meeting expectations but slightly below August's reading. Notably, the price index within the services ISM jumped 1.4 points to 74, indicating persistent inflationary pressures.

Fed Policy Outlook:

According to current market pricing, traders assign a 78% probability that the Federal Reserve will maintain rates unchanged at its next meeting. The Wednesday release of September FOMC minutes represents the week's primary event, with investors seeking insights into the Fed's future monetary policy direction.

Market Implications:

The elevated yield environment reflects ongoing concerns about inflation persistence and expectations for a prolonged higher-rate environment. The upcoming FOMC minutes will be critical for understanding the Fed's policy stance amid cooling economic growth but stubborn price pressures in the services sector.