The 10-year Treasury yield, which serves as a benchmark for mortgage rates and as an investor confidence barometer, on Tuesday surged to its highest level since 2007.
As of 9:49 a.m. ET, the note rose more than 2 basis points to hit 4.71% as investors considered the state of the economy and awaited key data from the labor market that could inform Federal Reserve monetary policy.
Earlier on Tuesday, the 10-year yielded as high as 4.745%, reaching its highest level since Aug. 15, 2007, when it reached 4.752%.
The 2-year Treasury yield, which is sensitive to expectations around where the Federal Reserve will set its own key borrowing rate, slipped by nearly 3 points to 5.083%.
10-year yield
Yields and prices move in opposite directions and one basis point equals 0.01%.
Rising yields come even though U.S. lawmakers were able to avoid a government shutdown as they passed a last-minute spending bill on Saturday night. That has bought them time to finish the necessary government funding legislation. A shutdown could have negatively affected the U.S. credit rating as well as the country’s economy.
Investors also weighed the Fed’s next interest rates moves. Central bank officials have hinted at another rate increase and rates staying elevated for longer since their September meeting.
In recent public remarks, Fed policymakers have indicated disagreement about whether another rate hike is needed before the end of the year, but concur that rates will have to stay elevated for what could be a prolonged period of time.
The central bank’s Federal Open Market Committee has been using rate increases to bring down inflation that officials consider to be too high even though the rate has come down considerably from its peak in mid-2022.
“Inflation continues to be too high, and I expect it will likely be appropriate for the Committee to raise rates further and hold them at a restrictive level for some time to return inflation to our 2% goal in a timely way,”…
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