The U.S. 10-year Treasury yield climbed to 5.225%, its highest level since July 2007, marking the sixth consecutive week of increases. This is the longest weekly losing streak for the yield since November 2024. The 30-year Treasury yield also reached 5.466%, its highest level since June 2004. Other yields, including the 5-year and 7-year, also hit multi-decade peaks. The 2-year yield advanced to 4.901%, while the 3-month yield was at 4.188%. Fixed-income desks are now watching 6% on the 10-year Treasury note as the next potential pain threshold.
The U.S. Treasury Department purchased $4.078 billion in 20-year and 30-year bonds as part of its expanded $6 billion buyback program. However, fixed-income desks noted that official buyback demand remains a 'drop in the bucket' against fundamental duration liquidation.
Traders are now discounting a 70% probability of another quarter-point rate hike at the Fed's October meeting, up from 50% prior to the week's data releases. This follows comments from Fed Governor Michael Barr, Philadelphia Fed President Anna Paulson, and New York Fed President John Williams. Chicago Fed President Austan Goolsbee warned that the energy shock must be treated as a source of persistent inflation rather than a temporary supply blip. Other central banks, including the European Central Bank and the Bank of Japan, are also navigating simultaneous tightening and hawkish guidance.
