10-year Treasury yield tops 4.9% as oil revives inflation concerns
The 10-year Treasury yield reached 4.954% on Sept. 10 as oil crossed $100, leaving investors focused on inflation data and the Fed.
By Jordan Bell · Startups & Deals Reporter
· 3 min read
The 10-year Treasury yield 4.9% threshold was breached on Sept. 10, with the benchmark reaching 4.954%, according to CNBC. That was its highest level since Oct. 26, 2023, and it matters for households because the 10-year is a widely watched benchmark for borrowing costs, including mortgages and auto loans.
CNBC reported that U.S. oil prices moved above $100 a barrel as markets assessed the prospect of a prolonged U.S.-Iran conflict in the Middle East. Traders viewed the jump in energy prices as a renewed risk for future inflation and interest rates, helping keep Treasury yields elevated.
The 10-year’s intraday level remained just below its Oct. 26, 2023 high of 4.989%. Elsewhere in the Treasury market, the two-year yield, which tends to be more sensitive to expectations for near-term Federal Reserve policy, reached 4.56%, its highest trading level since July 2024. The 30-year yield was about 5.368%.
A bond yield is the return implied by a bond’s market price and interest payments. Bond prices and yields move in opposite directions: when prices fall, yields rise. A basis point, the standard unit used for small interest-rate changes, equals 0.01 percentage point.
Why did the 10-year Treasury yield rise above 4.9%?
The day’s rise came even as the latest wholesale inflation report was not uniformly stronger than expected. The producer price index rose 0.4% in August from the prior month, matching the Dow Jones consensus forecast, CNBC reported. Core producer prices, which exclude food and energy, increased 0.2%, below the 0.3% forecast.
Even so, the oil move kept attention on what higher energy prices could mean for the inflation outlook. The data and the oil-price jump were separate signals: the August core reading came in below forecasts, while markets were also weighing the possibility of future price pressure and its implications for interest rates.
Treasury buyback and auction did little to change the move
The Treasury Department repurchased nearly $5.2 billion of off-the-run 10- and 20-year notes, from $10.5 billion offered, CNBC reported. Off-the-run securities are older issues of a given maturity that are no longer the most recently issued bonds. Yields changed little after the announcement.
CNBC said the purchases were concentrated among a small group of holders, likely primary dealers. That pattern indicated the buyback may have been intended to support liquidity in particular parts of the market rather than represent a broad effort to purchase government debt.
A 30-year Treasury auction also drew stronger-than-expected demand, according to BMO Capital Markets. The firm cited a 2.7-basis-point stop-through, meaning the auction cleared at a lower yield than expected, and said non-dealer bidding accounted for 97.8% of demand, compared with an 88.5% average across the prior six reopenings. Treasury yields nevertheless remained high.
Investors were next awaiting consumer inflation data due Friday and the Federal Reserve’s rate decision the following week, CNBC reported. Those releases were the scheduled events markets were watching for a clearer read on inflation and the policy outlook.
This story draws on original reporting from CNBC.
