USA: 10-Year Yield Rises to 8-Month High.

The yield on the 10-year US Treasury note rose to above the 4.4% threshold on Tuesday, the highest in eight months, as pro-inflationary risks and higher deficit spending due to the war in the Middle East lifted the outlook for US rates. Reports indicated the US deployed more troops to the Middle East, against the view that the administration was aiming for de-escalation, while attacks between militaries in the region continued. Key oil and gas prices rose further, adding to concerns of a rebound in inflation shortly after the latest PPI reading had already flagged some traction for wholesale prices. Pro-inflationary risks drove the FOMC last week to project less room for rate cuts. On the fiscal side, the presidential administration pushed for a larger military funding to combine with an already fiscally expansionary spending bill. Consequently, the auction for the latest 2-year note tailed by 1.8bps and had primary dealers take 24.12% of what was auctioned, the most since 2022.