The U.S. 10-year Treasury yield peaks above 5% for the first time since 2023, driven by rising oil prices and inflation fears as markets await the Federal Reserve’s policy decision.
The U.S. 10-year Treasury yield briefly moved above 5% on Monday for the first time since 2023, a level that traders view as a fresh warning sign for borrowing costs and risk assets. According to Tradeweb data cited by The Wall Street Journal, the benchmark touched 5.012% in morning trading before easing back. Official Treasury data later put the daily par yield at 4.97%, showing that the move was real but short-lived.
The rise came as oil prices jumped and reignited inflation worries just as the Federal Reserve begins its two-day policy meeting. Brent crude climbed as high as about $109.80 intraday before settling at $105.68 a barrel, after supply fears eased slightly. Reuters reported that pressure linked to Saudi Arabia’s East-West pipeline helped drive the move, with the route able to bypass the Strait of Hormuz and carry roughly 4 million barrels a day.
Bond-market strain has not been limited to the 10-year note. Treasury data showed the 20-year yield at 5.37% and the 30-year at 5.34% on Sunday, underscoring how elevated borrowing costs have become across maturities. Market watchers have also linked the latest sell-off to expectations of tighter monetary policy, with traders now focused on whether the Fed’s Wednesday statement will reinforce or temper those bets.
Stocks were weaker at the same time. Reuters reported that the Nasdaq Composite fell 0.56% on Monday, while the Philadelphia Semiconductor Index dropped 5.9% as investors reacted to renewed debate over artificial intelligence spending and safety. The combination of higher oil, firmer Treasury yields and softer appetite for risk also helped support the dollar, according to Reuters.
The Fed is due to release its policy statement at 2 p.m. Eastern on Wednesday, followed by a news conference at 2:30 p.m. The central bank’s decision will be closely watched by investors in crypto as well as traditional markets, because a sustained break above 5% in the 10-year yield could continue to pull money towards government debt and away from more volatile assets.
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