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10-Year Treasury Yield Hits 5%, Highest Level in Years
Confirmed
In Short: The 10-year Treasury yield reached 5%, its highest level since 2023, driven by rising oil prices and concerns about inflation, while the US Dollar strengthened against other currencies.
Interest rates are on the rise across the yield curve, with the 10-year Treasury note closing at a high yield of 4.8%, a level not seen in nearly three years. This increase is part of a broader trend, as the 30-year bond reached a 19-year record yield of 5.3% earlier this month. The 2-year Treasury yield is also at a near 2-year high of 4.4%. Analysts attribute these movements to rising oil prices and fears about inflation, which are pushing up borrowing costs.
According to reports, the 10-year U.S. Treasury note yield rose more than 2 basis points to 5% on Monday, its highest level since October 2023. This increase is influencing other financial markets, such as mortgages, auto loans, and credit card debt. The 2-year Treasury yield, which is particularly sensitive to short-term Fed policy, advanced more than 2 basis points to 4.666%. The U.S. Treasury has also taken steps to support liquidity by announcing a buyback operation aimed at buying up to $6 billion of longer-dated debt.
Traders and analysts noted that the buyback announcement did not immediately calm yields, and benchmark rates remained elevated. Despite the Treasury's efforts, the higher 10-year Treasury yield tends to push up mortgage and corporate borrowing rates. This dynamic is particularly concerning as fears about higher fuel prices feeding overall inflation are helping drive up yields. The US Dollar Index (DXY) also strengthened, tracking the Greenback’s value against a basket of six major currencies, reaching its highest level since September 2023.
Gold, traditionally seen as an inflation hedge, is under pressure due to rising global bond yields. Analysts at FXStreet noted that gold is leaning towards the lower border of the current trading range, having been pressured by the rising yields and new oil peaks. The benchmark 10-year US Treasury yield hovers near 4.97% after briefly touching 5.00%, its highest level since October 2023.
What's confirmed
- The 10-year Treasury note closed at a high yield of 4.8%, a level not seen in nearly three years and more than 60 basis points above estimates from the Congressional Budget Office (CBO), while the 2-year Treasury yield is at a near 2-year high of 4.4%.
What's still developing
- Mackerel catches in the north-east Atlantic have exceeded the levels advised by scientists by an average of 39% over the past 15 years, according to the Marine Stewardship Council (MSC).
- Conversely, a surprise hold would likely weigh on the US Dollar and Treasury yields, giving the precious metal room to rebound.
- At the time of writing, XAU/USD trades around $4,290, down 1.30% on the day, after touching an intraday low of $4,253, its lowest level since August 7.
- West Texas Intermediate (WTI) Oil trades around $99.00, near levels last seen on May 21, and has gained over 15% so far this month.
- Treasury yield briefly topped 5% Monday for the first time since 2023, as the price of oil surged and the nationwide average cost of diesel fuel hit an all-time high.
- The move in oil prices and yields moderated around noon ET, but both remain elevated for the day.
- Real-time market sites showed the 10-year Treasury yield at roughly 4.98% on Sept. 14, with intraday highs near 4.985%, reflecting a recent climb in benchmark yields this month.
- The analysts point to supportive UK-US yield spreads and see technical support around 1.3450–1.3420, with resistance above 1.3550.