10-year Treasury yield hits highest level since 2007 as traders bet a Fed rate hike is coming — SkimNews
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- 10-year Treasury yield climbed to 5.041%, its highest since July 2007, while the 30-year reached 5.401% (highest since June 2007) and the 2-year hit 4.688% (highest since July 2024).
- Traders priced a 92%+ chance of a 25-basis-point Fed rate hike at Wednesday's policy meeting, per the CME FedWatch tool, after August inflation remained "well above" the Fed's 2% target.
- WTI crude topped $102 a barrel on Tuesday as the Iran conflict persisted and the Strait of Hormuz remained "essentially blocked," with diesel gasoline surpassing $6 a gallon.
- Standard Chartered CIO Jonathan Liang said 10-year Treasurys' "tight correlation" with inflation expectations "will likely persist," while BMO Capital Markets measured the one-month rolling correlation between WTI and the 10-year yield at 0.96.
- NEC Director Kevin Hassett told CNBC inflation is "slowing down," previewing what he called the argument "if you were going to dissent tomorrow" at the Fed meeting.
Why it matters: The 10-year yield near 5% directly raises borrowing costs on mortgages, auto loans, and corporate debt, squeezing households and businesses alike. With WTI above $102 and diesel over $6 a gallon stoking inflation, the Fed is poised to tighten into an economy where energy-driven price pressures show no sign of breaking — leaving the central bank little room to pause, let alone cut.
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