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Economy — Federal Reserve

10-Year Treasury Yield Hits Highest Level Since 2002

Persistent inflation concerns and heavy government borrowing have contributed to the bond sell-off.

,   and  TIPP Staff
2 min read
10-year Treasury note yield hits highest level since 2002 as traders brace for key bond sale. Pic via(@CNBC)

The U.S. 10-year Treasury yield climbed to about 5.35% on Wednesday, its highest level since 2002, as investors sold government bonds ahead of a $39 billion Treasury note auction and the release of Federal Reserve meeting minutes.

Persistent inflation concerns and heavy government borrowing have contributed to the bond sell-off. Large debt issuance by technology companies to finance artificial intelligence infrastructure projects has also added pressure to borrowing costs.

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BMO’s Head of U.S. Rates Strategy Ian Lyngen said the Treasury auction could be particularly important in determining the direction of U.S. interest rates, reflecting investor demand for higher premiums to absorb new debt.

Higher yields have weighed on equity valuations, particularly technology stocks and real estate investment trusts, as borrowing costs rise and future earnings become less valuable.

Reuters-polled strategists expect the 10-year yield to decline to around 5% by year-end, although markets remain uncertain about the path of Federal Reserve policy.

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