Update: US Treasury Yields Dive From Multi-Decade Highs as October Fed Policy Tightening Bets Slide

03:54 PM EDT, 10/01/2026 (MT Newswires) -- (Updates with US and Global Yields and FedWatch data) US Treasury yields retreated from their highest in more than two decades as odds in favor of near-term monetary policy tightening dropped. The 10-year government bond yield dropped 5.4 basis points to 5.239% ahead of Thursday's close, after reaching an intraday peak of 5.344%, its highest since 2002. The 30-year rate fell 2.9 basis points to 5.610%, following a move up earlier in the day to its strongest level since 2002. The 2-year yield slumped 10.2 basis points to 4.785%. Traders slashed the near-term probability of the Federal Reserve raising its target rate by 25 basis points in October to 26% from 69% a week ago, according to the CME's FedWatch tool. On Thursday, the Institute for Supply Management's US manufacturing index fell to 54.5 in September from 54.6 in August, compared with expectations for an increase to 55.0 in a survey compiled by Bloomberg. Meanwhile, the S&P Global US manufacturing index for September was revised downwards to 55.9 from the flash reading of 57.0, versus forecasts for no revision in a survey compiled by Bloomberg. Globally, government bond yields were higher in Japan and lower in Australia. They were mixed in the United Kingdom, Germany and France.