Treasury Yields Spike as Diesel Prices Hit Record High

The US 10-year Treasury yield briefly surged past 5% on Monday for the first time since 2023, driven by rising diesel prices and concerns over inflation. The spike in yields could have far-reaching consequences for mortgage rates, auto loans, and the stock market.

According to AAA, diesel prices hit a record high of $6.23 per gallon, with the Middle East conflict showing no signs of easing. Economists warn that higher diesel prices could erode the value of bonds and worsen inflation.

Nic Puckrin, cross-asset analyst and founder of Coin Bureau, stated that 'the 10-year Treasury yield topping 5% is more consequential for US households than what the Fed does on Wednesday.' He noted that this rate sets mortgage rates, which are already near 7%, and that higher yields could push mortgages even higher.

The Federal Reserve is expected to hike interest rates by a quarter point at their Sept. 16 meeting in an attempt to counter inflation, but economists say this won't address the underlying problem of rising energy prices.