NEW YORK, Oct 1 (Zark News) — The U.S. 10-year Treasury yield hit its highest level in 24 years on Thursday, climbing to 5.342% as a brutal bond selloff gathered pace on the first trading day of the fourth quarter, Reuters reported.
The benchmark yield, which underpins borrowing costs across the global economy, rose past its 2007 peak and reached its highest since early 2002, Reuters reported. The bond market posted its biggest quarterly rise this century in the third quarter. The 30-year yield also breached multi-decade highs around 5.65%, while the two-year yield, sensitive to Federal Reserve policy, stood near 4.9%.
European shares opened the quarter lower as investors turned risk-averse, with the pan-European STOXX 600 falling 1% to its lowest since mid-September, Reuters reported. Analysts attributed the selloff to soaring energy costs from the Middle East conflict fueling inflation fears, the AI investment boom strengthening growth expectations, and expectations that interest rates could stay higher for longer.
“When Treasury yields last were this high, the U.S. economy was in an entirely different era,” the Wall Street Journal noted, pointing to structural forces now driving yields: a growing tide of government debt, the artificial-intelligence investment boom, and rising trade barriers pushing up inflation. “The trend in yields is upward,” Blerina Uruçi, chief U.S. economist at T. Rowe Price, told the Journal, adding that “those factors are here to stay.”
Wednesday brought a brief reprieve when August personal consumption expenditures inflation — the Fed’s preferred gauge — came in lighter than expected at 3.4% year over year, below the 3.7% forecast, with core PCE at 3%, according to market data. Traders raised the odds of a Federal Reserve hold at the Oct. 27-28 meeting to about 65%, per CME Group’s FedWatch tool.
Higher yields are already biting consumers: the average 30-year fixed mortgage rate rose to 7.58%, its highest since November 2023, according to market reports. Precious metals weakened under the weight of elevated yields, with gold trading around $4,162 an ounce and silver near $61.78.
Sources: Reuters, Wall Street Journal via The Times
