Overview
- The yield on the ten‑year US Treasury climbed to about 5.03–5.04 percent on Tuesday, the highest level since 2007 and a mark that raises long‑term borrowing costs for governments and businesses.
- Markets expect the Federal Reserve to raise its policy rate by 25 basis points at its mid‑September meeting because higher oil prices and war‑related inflation have pushed inflation expectations up.
- A modest US Treasury buyback of roughly $6 billion has had little effect on the move, which is driven by broad supply, demand and inflation fears rather than a single market operation.
- Investors are shifting how they allocate capital: foreign flows have recently favored US equities over Treasuries and hedge funds have roughly doubled their government‑debt holdings to about a 7 percent market share, a change that can amplify volatility.
- The rise in sovereign yields is already hitting people and projects: German ten‑year Bund yields are near 3.57 percent and German mortgage rates have climbed toward 4.25 percent, making home loans and building projects more expensive.