US Treasury Yields Surge to Near 5% Mark, Adding Market Pressure

A sharp rise in US Treasury yields has added to market pressures, with the probability of a 25-basis-point interest rate hike by the Federal Reserve nearing 90%. The US 10-year Treasury yield is now on the verge of breaching the 5% mark, a level only briefly seen since October 2023 and never closed above since 2007.

The bond market sell-off is not limited to the US, with UK, Germany, and France all experiencing multi-year highs in their respective 30-year yields. The sharp increase has raised stakes for Fed Chair Kevin Warsh ahead of the central bank's decision on Wednesday.

Norges Bank Investment Management plans to sell US treasuries worth nearly $80 billion from its current $215 billion holdings, while Japan's Government Pension Investment Fund may sell up to $62 billion in US bonds. This comes as many large holders are pushing more supply into the market.