US 10-year yield rises to highest since Dec 20, 2016

The yield on the 10-year Treasury note jumped to 2.583% in the overnight trade; its highest level since December 20.

The spike in the yields represents the widespread belief that the Federal Reserve would hike rates next week. As per CME data, the probability of a 25 basis point hike next week stands above 90%.

The two-year yield, which mimics short-term rate hike/inflation expectations, rose to 1.378%; the highest level since 2009.

The next move is seen happening in June. It remains to be seen if the Fed turns a blind eye towards weak productivity and wage growth numbers and deliver sequential rate hikes as anticipated by Jeffrey Gundlach, chief executive officer at DoubleLine Capital.