US Treasury Yield Crosses Key Threshold
On Monday the 10-year US Treasury yield, the market's reference rate, momentarily hit 5.011%, Dow Jones Market Data showed — a peak not seen since October 2023 — then slipped back under 5%. Several forces combined to push it past that closely watched round number: heavier government issuance, an economy that keeps expanding, and a wave of corporate borrowing tied to artificial intelligence spending. Bond prices and yields always move in opposite directions.[S1]
The move higher came after the US Treasury carried out a buyback expansion it had flagged earlier. In the prior week it invited offers for as much as $6bn of notes maturing in 10 to 20 years, an operation three times larger than the one before it. Separately, the 30-year US Treasury yield stayed near its loftiest level since 2007.[S1]
European Bonds Under Pressure
The downturn in bonds has rippled into Europe as well. On Monday, France's 10-year government yield climbed to 4.50%, and Italy's comparable yield stood at roughly 4.40%. Germany's 10-year Bund yield, the region's benchmark, rose to as much as 3.538%, Dow Jones Market Data reported — a 15-year high.[S1]
Energy costs are adding to the strain. Brent crude climbed to about $107 a barrel on Tuesday morning, with US West Texas Intermediate near $103, after strikes on Saudi energy facilities and Gulf shipping heightened worries about flows through the Strait of Hormuz.[S1]
Central Banks in Focus
Last week the European Central Bank lifted its deposit rate by a quarter point, to 2.5%, and cautioned that inflation may stay above its goal for a prolonged stretch. Traders are betting on at least one more ECB hike before the year is out.[S1]
Three central-bank meetings now command attention: the US Federal Reserve on Wednesday, the Bank of England on Thursday and the Bank of Japan on Friday. A Reuters poll showed 85% of economists anticipating a quarter-point Fed increase, while money markets put the odds near 93%. The BoE is broadly expected to hold steady, with Reuters-surveyed economists unanimous on no change, though some analysts say a surprise hike can't be excluded. The BoJ is widely seen raising borrowing costs.[S1]
