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2w ago

10-Year Treasury Briefly Tops 5% as Yields Spike

Rising market bets on a Fed rate hike have pushed long-term borrowing costs higher, signaling tighter credit conditions for households and businesses.

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People walk past the New York Stock Exchange (NYSE) and a statue of George Washington at Wall Street on March 23, 2021 in New York City. - Wall Street stocks were under pressure early ahead of congressional testimony from Federal Reserve Chief Jerome Powell as US Treasury bond yields continued to retreat. (Photo by Angela Weiss / AFP) (Photo by ANGELA WEISS/AFP via Getty Images)
BP gas station sign displaying prices of $4.49 for regular cash and $4.57 for regular credit, with American flags nearby.
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Overview

  • On Monday the yield on the 10-year U.S. Treasury crossed above 5% intraday before falling back below that level later in the trading day.
  • Traders now assign high odds to an imminent Federal Reserve rate increase, a shift that has been a key force behind the recent bond sell-off and higher yields.
  • Rising oil and record diesel prices tied to tensions in the Middle East, including risks to flows through the Strait of Hormuz, have increased inflation worries that pushed yields up.
  • Treasury Secretary Scott Bessent announced a plan to buy back up to $6 billion of government debt to steady markets while investors also prepare for heavy corporate bond issuance tied to tech and AI investment.
  • Higher long-term yields are already lifting mortgage and auto loan rates, raising borrowing costs for households and adding pressure on corporate funding and equity valuations as markets await the Fed decision.