Market attention grows as US Treasuries approach five percent yield

The number five is doing a lot of heavy lifting in bond markets right now. US Treasury yields have blown past the psychologically critical 5% threshold across multiple maturities, sending ripples through equities, mortgages, and basically every corner of the financial system that depends on the cost of borrowing money. On September 23, the 10-year Treasury yield surged to an intraday high of 5.14%, a level not seen since July 2007. It settled the day at 5.11%. The 5-year yield crossed above 5% for the first time since 2007 as well, propelled by a lackluster auction that revealed just how unenthusiastic buyers have become about lending the US government money at current terms. The auction nobody wanted to win A $70 billion auction of 5-year notes on September 23 cleared at a high yield of 5.033%, the steepest since June 2006. The bid-to-cover ratio came in at just 2.21, a metric that measures demand relative to supply. For context, anything below 2.5 tends to make bond strategists nervous. The 30-year yield pushed even further into uncomfortable territory, reaching 5.44% on September 24. That’s the highest it’s been since 2004. Yields eased marginally in early trading on September 2...