10-Year Treasury Yield Climbs to 5.12%, Highest Since 2007

Overview

• U.S. Treasury yields jumped across the curve with the 10-year at about 5.12%, the 30-year near 5.41% and the two-year around 4.91%, marking multi-year highs that tighten financing conditions.
• S&P Global business surveys showed faster activity and higher input costs, and Brent crude topping $102 per barrel added to inflation concerns that helped push yields higher.
• Market pricing now implies roughly a 71% chance of a Federal Reserve rate increase in October, a sharp rise in expectations for tighter policy.
• The Treasury has expanded targeted long-term buybacks, announcing an operation of up to $6 billion, but analysts say those purchases are small relative to the more than $30 trillion market and unlikely to reverse the move.
• Higher yields are already raising costs for mortgages, auto loans and corporate borrowing and weighing on stocks, and sustained pressure could slow growth by raising firms’ funding costs and lowering equity valuations.