US 10-Year Treasury Yield Climbs to 5.04 Percent on September 15, Highest Since July 2007 as Oil Surge and Fed Hike Expectations Drive Bond Selloff

The US 10-year Treasury yield rose to 5.04 percent on Tuesday September 15, the highest level since July 2007, before pulling back to around 5.00 percent by midday in New York, according to Bloomberg, CNBC, and Trading Economics. The yield climbed as much as five basis points during the session, extending Monday's breach of the 5 percent threshold for the first time since October 2023. The 2-year yield reached 4.688 percent intraday, its highest since July 2024, before settling around 4.65 percent. The move came as Brent crude oil jumped to $107-108 per barrel amid continued closure of Saudi Arabia's East-West pipeline and postponement of Iran-GCC talks, fueling inflation concerns ahead of the Federal Reserve's two-day policy meeting that began Tuesday. Markets are pricing in a 92 percent probability that the Fed will raise rates by 25 basis points when the meeting concludes Wednesday at 2:00 PM Eastern Time, according to the CME FedWatch tool. The 10-year yield serves as a benchmark for consumer loans and corporate funding costs globally, and its rise to nearly two-decade highs signals tightening financial conditions across the economy. Standard Chartered's CIO of fixed income and FX noted that US 10-year Treasuries remain highly sensitive to inflation expectations, and with inflation gauges still above the Fed's 2 percent target, this tight correlation will likely persist.