US 10Y Bond Yield Hits 19-year High

The yield on the 10-year US Treasury note surged up to 16 bps to above 5.12% on Wednesday, the highest since 2007, as strong economic data and high energy prices consolidated expectations of more rate hikes by the Federal Reserve. S&P Global data showed private-sector activity expanding at its fastest pace in more than five years in September, with both services and manufacturing improving. The survey also showed accelerating inflationary pressures across both sides of the economy. The data were combined with hawkish remarks from Iranian leaders on their conflict with the US and GCC states, dimming hopes that imminent diplomatic improvements could restore energy supply from the Middle East. Treasuries have also been pressured by soaring corporate debt supply, with AI companies issuing over $1.5 trillion this year. Hence, primary dealers showed signs of uneasy demand at auctions, with the latest 5-year note auction tailing 3.1bps, well above recent averages.

US 10 Year Government Bond Yield increased to 5.04%, the highest since July 2007. Over the past 4 weeks, US 10 Year Note Bond Yield gained 34.20 basis points, and in the last 12 months, it increased 89.10 basis points.

The yield on the US 10-year Treasury note surged toward 5.1% on Wednesday, returning to 2007 highs, after stronger-than-expected PMI data for the US fueled expectations of further Fed rate hikes. Preliminary S&P Global data showed private-sector activity expanding at its fastest pace in more than five years in September, with both services and manufacturing improving. The survey also showed employment rising at its fastest pace since 2022, alongside renewed inflationary pressures. Meanwhile, comments from several Fed officials have been interpreted as more hawkish. Traders are now pricing in a nearly 60% chance of another 25 bps rate hike next month, following last week’s increase, while the odds of another move in December stand at around 48%. In addition, oil prices resumed their advance as traders awaited further diplomatic developments between the US and Iran aimed at ending the conflict.