US Treasury yields remain above 5% amid ongoing selloff

The 10-year US Treasury yield briefly punched above 5% on September 15-16, touching roughly 5.04%, a level the bond market hasn’t seen since July 2007. It has since settled around 4.95%, but the message from fixed income markets is clear: the era of cheap money is over, and the bill is coming due. The 30-year bond told an even more dramatic story, trading above 5.28% in mid-September. Year-to-date, the 10-year yield has climbed approximately 0.8 percentage points. The Fed steps back in The Federal Reserve raised the federal funds rate by 25 basis points to a target range of 3.75% to 4.00% during its September 16-17 FOMC meeting. It was the central bank’s first rate hike since 2023. Fed Chairman Kevin Warsh described inflation as “too high… for too long.” The Fed’s dot plot indicates market expectations of more tightening in the future. What’s driving the selloff Three forces are converging to push yields higher. First, inflation has remained stubbornly elevated. Second, oil prices have pushed above $100 per barrel, driven by geopolitical tensions that have constrained supply. Third, the US government’s borrowing needs remain enormous, and the Treasury has been issuing debt at a pac...