Stocks mixed as oil prices pause climb but yields hover near highs

BOND YIELDS NEAR HIGHS

Benchmark 10-year U.S. Treasury yields dipped from 18-month highs on Friday as oil prices eased, though investors remained cautious ahead of the Federal Reserve's policy meeting next week, which many believe could bring a hawkish surprise.The benchmark 10-year U.S. Treasury yield ticked down to 4.679%, while the yield on 30-year Treasury bonds was steady at 5.163%, not far from a 19-year peak of 5.201%.

Markets show traders believe central banks are more likely to raise borrowing costs, with a one-in-three chance of a rate hike from the Fed as soon as next week - a sea change from merely a week ago - while a move in September is more than fully priced in.

"Our base case remains an on-hold Fed, but we see a risk that the long-end might start to question whether Chair Warsh is only ready to 'talk the talk' rather than 'walk the walk' on delivering price stability," Davies said. The European Central Bank left rates unchanged on Thursday, but a September rate hike is about 70% priced in. Data on Friday offered a more optimistic economic outlook after surveys of business activity showed Germany's private sector returned to growth in July for the first time in four months and contraction in France's private sector eased this month.

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