Ten-Year Treasury Hits a 15-Year High

WASHINGTON–The yield on the 10-year U.S. Treasury note has hit a 15-year high, which could lead to higher costs for many borrowers.

The increase in yields is also “raising concern” on Wall Street about the potential fallout in the stock, bond and housing markets, the Wall Street Journal added.

A key benchmark for interest rates across the economy, the 10-year yield settled at 4.258%, according to Tradeweb, up from 4.220% earlier this week, marking its highest close since June 2008, months before the collapse of Lehman Brothers and expansive Federal Reserve policy “ushered in more than a decade of historically low bond yields,” the Journal added.

‘Nervous’ Investors

“The rise in yields is making investors nervous, because past surges have at times proved destabilizing for markets,” noted the Journal analysis. “With the 10-year yield still well below the level of short-term interest rates set by the Fed, some analysts see ample room for it to keep climbing—a development that could lead to unexpected disruptions, as investors are forced to unwind wagers based on projections for lower yields.”

The report further noted the 10-year yield has been climbing for weeks based largely on a run of solid economic data, which has prompted many investors to abandon bets that the U.S. is headed toward a recession over the next six to 12 months.

An ‘Extra Boost’

In addition, longer-term yields got an extra boost this month when the Treasury Department announced that it would need to borrow more than anticipated in the coming months to finance the federal budget deficit, the Journal added.

CUToday