10-Year Yield Tops 5% Ahead of Fed Decision — SkimNews
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- 10-year Treasury yield touched 5.014% intraday—highest since October 2023—before pulling back to 4.987%, while the 2-year rose to 4.658% and the 30-year sat at 5.353%
- August CPI matched expectations but remained far above the Fed's 2% goal for the fifth straight year, driving 92.3% odds of a 25-basis-point rate hike at Tuesday-Wednesday's meeting per the CME FedWatch tool
- Freedom Capital Markets' Jay Woods said hiking is "the cleaner decision based on the data and current market expectations," warning that no change "screams once again the Fed is behind the curve"
- Treasury Secretary Scott Bessent's expanded bond buyback program has failed to contain long-end yields against $1.2 trillion in daily Treasury market volume, with BMO Capital Markets arguing the measure "fails to address the prevailing fundamental drivers"
- Albion Financial Group's Jason Ware attributed part of the yield rise to a supply-demand imbalance as enormous Treasury and corporate debt compete for investor capital, and said he doesn't expect markets to break simply because the 10-year crosses 5%
- Gibraltar Capital's George Awad warned that leveraged hedge-fund exposure—including cash-futures basis trades—could force simultaneous position unwinds if funding costs, margin requirements, or volatility spike
- The S&P 500 remains up 11% year-to-date despite the 10-year's surge, with BMO noting equity weakness has stayed contained so far
Why it matters: With a 92.3%-priced Fed hike already baked in, Treasury Secretary Bessent's bond buybacks have failed to constrain long-end yields against $1.2 trillion in daily market volume, heavy debt issuance, and sticky core inflation. Leveraged hedge-fund basis trades highlighted by Gibraltar Capital could amplify any sell-off if volatility rises, threatening the S&P 500's 11% year-to-date gain.
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