As the likelihood of a U.S. benchmark rate hike rises, Treasury yields approach 5%

This week, the U.S. Federal Reserve (Fed) will hold a Federal Open Market Committee (FOMC) meeting and decide the benchmark interest rate. In the market, it is believed that the likelihood of an interest rate hike has increased as inflation and employment indicators, along with rising international oil prices, have come together. Recently, strongerthanexpected U.S. core consumer inflation and nonfarm employment have been giving weight to the view that monetary policy may once again move toward tightening. The interest rate futures market is also pricing in a high probability of a rate hike at this meeting. Rising international oil prices are also acting as inflationary pressure. Both Brent crude and West Texas Intermediate (WTI) have risen sharply, and the yield on the U.S. 10year Treasury note has climbed to near 5%. Korean government bond yields have also surged, raising concerns that borrowing rates and the stock market could face greater pressure. The Korean government and financial authorities plan to review macroeconomic and financial market conditions after the FOMC results.