10-year Treasury yield tops 5%, highest since 2007

The yield on the 10-year US Treasury note briefly climbed above 5% on September 14, hitting as high as 5.01% before pulling back slightly. It’s the first time the benchmark rate has touched that level since 2007, and the move has implications for virtually every corner of the financial system. What’s driving yields higher Three forces are colliding at once. Oil prices have been holding above $100 per barrel for WTI and Brent crude futures, fueled by escalating tensions in the Middle East. Energy costs at that level act as a tax on consumers and businesses alike, and they feed directly into inflation readings that have stubbornly refused to fall back toward the Federal Reserve’s 2% target. Then there’s the sheer volume of government debt. The US national debt currently sits at roughly $39 trillion, and the Treasury Department has to keep issuing new bonds to finance it all. A $42 billion 10-year auction held in mid-August cleared at a yield of 4.683%, itself the highest auction yield since 2007. The third factor is less obvious but increasingly significant: corporate America’s appetite for capital. Companies are borrowing aggressively to fund artificial intelligence infrastructure b...