US 10-Year Treasury Yield Holds at 5%

The yield on the US 10-year Treasury note traded around 5% on Wednesday, remaining near its highest level since July 2007 as investors awaited the latest Federal Reserve policy decision, with the central bank widely expected to raise interest rates as policymakers seek to contain inflationary pressures. Markets are currently pricing in roughly a 92% probability of a 25-basis-point increase, marking the first rate hike in around three years. Traders will also look for signals on another potential rate hike later this year, with expectations rising for a move in October or December. Treasury yields were further supported by elevated oil prices, which increased inflation risks, alongside mounting fiscal concerns in the US. Meanwhile, Treasury Secretary Scott Bessent told Congress on Tuesday that the US fiscal outlook had improved in 2026, adding that discussions on fiscal consolidation would follow.

The yield on the US 10-year Treasury note rose for a fifth consecutive session on Tuesday, hitting the closely watched 5% threshold for the first time since July 2007. The yield climbed as high as 5.04% before easing slightly to 5.01%. The renewed rise in oil prices, which pushed crude back above $100 a barrel, continues to cloud the inflation outlook, particularly as tensions in the Middle East remain elevated and risks to oil supplies increase. In addition, the Fed is widely expected to raise interest rates for the first time since 2023 on Wednesday. A decision to leave rates unchanged could put further upward pressure on Treasury yields, as markets may interpret such a move as undermining the Fed’s credibility in its fight against inflation. US headline inflation held at 3.4% in August, while the core inflation rate was at 2.4%. Investors will also closely scrutinize the Fed’s updated economic projections, particularly its outlook for interest rates.

The yield on the 10-Year US Treasury note climbed above 5% on Tuesday, reaching its highest level since July 2007 as the global bond selloff intensified amid surging energy prices, mounting inflation risks and growing fiscal concerns. Oil prices extended their gains as Saudi Arabia’s East-West pipeline remained shut, while Ukraine challenged President Trump’s claim that it had already reached an agreement with Russia to halt attacks on energy infrastructure. Meanwhile, markets are pricing in roughly a 92% probability of a 25-basis-point rate hike by the Federal Reserve on Wednesday, which would mark the first increase since July 2023. Traders will also look for signals on further monetary tightening as policymakers contend with upward risks to prices. Additionally, long-term yields were driven higher by surging corporate debt issuance from AI companies, which has limited capital allocation by primary dealers and other financial institutions.