US 10Y Bond Yield Hits 19-month High

The yield on the 10-year US Treasury note rose toward 4.75% on Tuesday, the highest in 20 months, as surging credit supply and risks of entrenched inflation extended the aversion to longer maturity bonds. Corporate debt issuance in the US gained ground on the markets' forefront, with estimates pointing to $1.5 trillion in bonds by AI companies this year. The surge in dollar-denominated fixed-income magnified ongoing concerns of accelerating deficit spending in the US and other G10 economies, raising estimates on the term premia in bond markets worldwide. Meanwhile, oil prices rose further as President Trump signaled there was no rush to end the blockade against Iranian tankers in the Persian Gulf. Higher energy prices had already lifted underlying inflation this year, raising the pressure on Treasuries, as Fed Chairman Warsh spurred worries of inflation complacency after noting a rate hike may not be his preferred tool against inflation.

US 10 Year Government Bond Yield increased to 4.75%, the highest since January 2025. Over the past 4 weeks, US 10 Year Note Bond Yield gained 15.20 basis points, and in the last 12 months, it increased 44.00 basis points.

The yield on the 10-year US Treasury note rose past 4.7%, not far from the 19-month high of 4.75% tested last week as lingering concerns of inflation and increasing credit supply extended the aversion to bonds in the long end of the curve. Oil prices rose further as President Trump signaled there was no rush to end the blockade against Iran energy, preventing the flow of tankers from the Persian Gulf. Higher energy prices lifted underlying inflation this year, although a softer CPI cooled immediate worries. Still, concerns that the Federal Reserve may be complacent against inflation were reflected by the surge in long-dated yields. These were initially flagged by Fed Chair Warsh stating a rate hike may not be the preferred tool to combat higher prices. Lastly, debt issuance in the US soared as AI companies raised $1.5 trillion in bonds this year, lifting the supply of dollar-denominated fixed-income that could limit the relative appetite for Treasury securities.