Overview
- The 10-year Treasury briefly rose above 5% in mid-September before easing slightly, a move driven by renewed buying and selling in the market.
- Investors are pricing a greater chance of further Fed rate increases because August consumer inflation ran 3.4% year over year and oil has climbed after the Iran conflict.
- Treasury Secretary Scott Bessent has expanded targeted buybacks to at least $4 billion and has publicly signaled active intervention, but those operations remain small relative to total issuance.
- Big tech 'hyperscaler' borrowing for AI infrastructure is adding to supply pressure with roughly $250 billion of bond issuance expected in 2026 and forecasts of much more next year.
- Higher long-term yields are already lifting mortgage and consumer loan rates, pressuring home affordability and lowering valuations on growth stocks by increasing the discount rate used to value future earnings.