Washington: The yield on the benchmark 10-year US Treasury note briefly crossed 5 per cent Monday as rising oil prices and inflation concerns triggered a sell-off in government bonds, The Wall Street Journal reported.
The yield reached about 5.01 per cent during trading before retreating. It settled at 4.96 per cent, snapping a five-day run of increases.
It was the first time the closely watched yield had moved above 5 per cent since 2023. The two-year Treasury yield settled at 4.632 per cent after touching its highest level since 2024.
The move is significant because the 10-year Treasury yield helps determine borrowing costs across the US economy. It influences mortgage rates, corporate debt and other consumer and business loans.
Its recent increase has already pushed US mortgage rates back towards 7 per cent.
The latest rise was driven partly by fears that disruptions linked to the Middle East conflict could keep energy prices elevated and add to inflation.
Crude oil prices rose by as much as 5 per cent during Monday’s session before moderating to an increase of about 1 per cent.
Investors were also preparing for the Federal Reserve’s monetary policy decision this week. Financial markets placed a 93 per cent probability on an interest-rate increase, according to LSEG data cited by the Journal.
The Federal Open Market Committee is scheduled to meet Tuesday and Wednesday.
The sharp increase in bond yields presents a challenge for the Trump administration, which has sought lower borrowing costs ahead of the November 3 midterm elections.
President Donald Trump has called for lower interest rates, while Treasury Secretary Scott Bessent has taken steps intended to contain long-term yields.
The Treasury has expanded its purchases of longer-term government debt. Those operations, however, have so far failed to prevent yields from moving higher.
The surge also reflects broader concern about increasing US government borrowing and strong demand for capital from the rapid expansion of artificial intelligence infrastructure.
Investors are assessing whether the 5 per cent level will again serve as a ceiling, as it did in 2023, or whether the market is entering a period of persistently higher long-term interest rates.
Government bond yields also rose in Europe and Japan. German 10-year yields touched a 15-year high, while British government bond yields reached levels not seen in 19 years. Japanese yields moved higher before an expected Bank of Japan rate increase.
(IANS)
