US Treasury Yield Breaks 5% Barrier Amid Inflation Fears
The US Treasury yield has topped 5% for the first time since October 2023. The 10-year Treasury note, which serves as a global benchmark for interest rates, rose to 5.014% on September 14. This marks the second time the 10-year yield has exceeded 5% since 2007, just before the global financial crisis.
The surge in yields is largely attributed to inflation concerns. With oil prices rising due to the ongoing conflict with Iran and Saudi Arabia's shutdown of its East-West pipeline, price indexes have jumped above the Federal Reserve's 2% target. Additionally, the massive US federal budget deficit and large-scale corporate bond issuance tied to artificial intelligence infrastructure have contributed to the increase in yields.
As a result, the probability of a 0.25 percentage point rate hike at the Fed's September 15-16 Federal Open Market Committee meeting has risen to 92.3%, according to the CME's FedWatch tool.