U.S. Treasury yields dip slightly following recent highs amid inflation and Middle East tensions

U.S. Treasury yields dipped slightly early Tuesday after marching to fresh highs during the previous session amid persistent concerns over inflationary pressures.

The 10-year U.S. Treasury note yield — the key benchmark for mortgage borrowing, auto loans and credit card debt — was down about 1 basis point at 5.2278%.

The 30-year Treasury bond yield, which typically reacts to geopolitical developments, was also lower by 1 basis point at 5.466%.

The 2-year Treasury note yield, which tends to move in line with short-term Federal Reserve interest rate decisions, was flat at 4.9243%.

One basis point is equal to 0.01%, and yields and prices move in opposite directions.

On Monday, both the benchmark 10-year note yield and the longer-dated 3-year Treasury bond yield jumped by 5 basis points, with the 2-year yield increasing by 6 basis points.

The recent spike in borrowing costs, which has seen yields move to multiyear highs, comes as the U.S. and Iran held separate talks with mediators with the aim of resolving the ongoing conflict in the Middle East, according to a report by Al Jazeera.

The seven-month war continues to weigh on energy prices, fueling investor expectations of further rate hikes from the Federal Reserve to help tackle runaway price increases, which have been exacerbated by rising government debt.

Traders are now pricing in a more than 72% chance of another Fed rate hike at its next meeting in October, according to the CME FedWatch tool. That comes after the central bank's Federal Open Market Committee earlier this month voted by 12-0 to raise its main interest rate by 25 basis points,

Meanwhile, a slew of economic data releases this week — including August's JOLTS report, the core PCE index and quarterly GDP print, and the monthly nonfarm payrolls and unemployment rate — will provide markets with fresh insights into the domestic economic picture.