Overview
- Treasury yields climbed sharply on Thursday with the 10-year around 5.1–5.2% and the 30-year above 5.4%, levels last seen in the mid-2000s.
- The Federal Reserve raised its policy rate by 25 basis points on Sept. 20 and market pricing has since shifted to a greater chance of further hikes at upcoming meetings.
- A Houthi missile attack that pushed Brent toward $100 lifted inflation concerns, prompting traders to demand higher yields as protection against rising energy costs.
- Weak demand at recent Treasury auctions prompted the Treasury to conduct buybacks to support liquidity, but those operations are small compared with total outstanding debt.
- The surge in U.S. yields has pushed global borrowing costs higher with Japan's government bond yields jumping after the BOJ rate rise and emerging-Asia spreads widening, which raises costs for mortgages, corporate loans and government financing.