Projected interest rates on US Treasury bonds closed the session higher following hawkish comments from Federal Reserve officials, which reminded investors that resilience in the US economy likely means that borrowing costs will remain higher for longer.
That outlook helped 10-year Treasury yields rise to 16-year highs today in a bond selloff that, combined with increases in oil and dollar prices, dampened appetite for stocks. The Russell 2000 small-cap index turned negative for the year on Monday.
Traders are now pricing in 29% chances that policymakers will raise rates at their November meeting, compared with 16% a week ago, according to CME’s FedWatch tool.
Interest rates on the 10-year Treasury note closed at 4.80%. Meanwhile, interest rates on 2-year notes closed at 5.15%.