Global Interest Rate Hike Wave Hits US Treasury Yield
The US Treasury yield has risen to 5% for the first time since 2007 as major central banks globally take steps to combat inflation. The Federal Reserve's decision to raise interest rates on Wednesday, followed by a similar move from the Bank of Japan on Friday, has fueled concerns about inflation.
Oil prices surged due to uncertainty around the Middle East conflict, increasing the risk of upside inflation and prompting central banks to act swiftly. The US 10-year Treasury yield climbed over six basis points to 5% as traders price in further Fed rate hikes, with money markets predicting 34 basis points of tightening by the end of 2026.
On Friday, the Bank of Japan increased interest rates by 25 basis points to 1.25%, its highest level in 31 years, while the Federal Reserve opted for a similar increase of 25 basis points on Wednesday. The Fed's decision was unanimous, recognizing that inflation is well above its 2% goal.