U.S. 10-Year Treasury Yield Hits 5% as Oil Surge Raises Fed Rate Fears

The U.S. Treasury yield hit a new multi-decade high as a spike in oil prices raised fresh fears about inflation‌ in the run-up to the Federal Reserve’s September meeting, according to Tradeweb data cited by the Wall Street Journal. 

The 10-year yield climbed as high as 5.012% during‌ Monday’s session, its highest intraday level since 2007, before retreating back below the 5% threshold.

However, Treasury data were lower than the wide 10-year par yield of the daily yield curve of the Treasury Department, 4.97% on September 14, 4.96% on September 11, and 4.79% at the start of September. Bond prices later recovered after the morning selloff, with Tradeweb data showing the yield near 4.96% at the close of trading.

Longer maturities also came under pressure. The Treasury’s September 14 data showed a yield of 5.37% on its 20-year bond and 5.34% on its 30-year. This was even after it was at 5.27% on 1 September. 

Rising government bond yields have challenged risk assets, including crypto assets, as global investors weigh the appeal of volatile assets against higher-yielding debt.

Oil was one of the major movers in the bond market on Monday, with Brent crude rising as much as 5% to about $109.80 in early trading and then falling back to a close of $105.68 a barrel, with supply issues arising from attacks on Saudi Arabia’s East-West pipeline. The pipeline also bypasses the Strait of Hormuz and has the capacity to move about 4 million bpd, or about 4 percent of global supply.