US Treasury Yield Hits 5% Milestone Ahead of FOMC Rate Hike Decision

The U.S. 10-year Treasury yield hit a significant milestone on August 14th, reaching 5.014% intraday and crossing the 5% threshold for the first time in nearly three years.

This marks a turning point for mortgage, auto, and credit card lending rates, as the benchmark 10-year Treasury yield serves as a crucial indicator of market expectations.

The sharp rise in yields is attributed to the market pricing in higher probability rate hikes after August's Consumer Price Index (CPI) data came in above the Fed's 2% target.

According to CME Group's FedWatch tool, the probability that the Fed will raise its benchmark rate by 0.25 percentage point at the FOMC meeting on the 15th-16th stands at 92.3%, further solidifying market expectations.