Overview
- The benchmark 10-year Treasury yield reached 5% on Monday, lifting long-term borrowing costs and pushing average 30-year mortgage rates into the mid-6% range.
- Markets cited a mix of higher oil prices tied to the Iran war and worry about the federal debt after it topped $40 trillion as the main drivers of the selloff in Treasuries.
- The Treasury has increased buybacks, tripling purchases to $6 billion in longer-term notes to try to lower yields, but the move has so far had limited impact on market rates.
- Traders are pricing a likely quarter-point Federal Reserve rate hike at the Sept. 15–16 meeting as officials confront stickier inflation and higher energy costs.
- Analysts warn that even small yield gains raise the government’s debt-service bill and that the current level is high by recent standards though not unprecedented compared with the 1990s and 1980s.