U.S. Treasury yields extended their rally for a sixth consecutive week, with the 10-year note trading near 5.177% after touching an intraday peak of 5.225%, its highest level since July 2007. The advance marks the longest weekly losing streak for Treasuries since November 2024.
The selloff was broad-based across the curve. The 30-year Treasury yield rose to 5.468% after breaching 5.501% intraday—a level not reached since June 2004—and logged its largest weekly climb since May 2026. The 2-year advanced to 4.889%, hovering near multi-month highs following its biggest single-day gain since March 2026. Yields on the 5-year and 7-year locked in multi-decade peaks.
Market participants pointed to structural selling pressures. Sean Peche, founder and portfolio manager at Ranmore Fund Management, noted that financial assets now compete directly with "risk-free" government bonds offering around 5%, while the S&P 500 provides only roughly a 1% dividend yield. "The challenge today in U.S. markets is that both operating margins and valuations are already at high levels," Peche said, adding that relying on further gains in either may be "expecting too much." Fixed-income desks described official Treasury buyback demand as a "drop in the bucket" against fundamental duration liquidation.
The S&P 500 posted a modest 0.2% gain for the month, a stark contrast to a rally of more than 3% in September 2025, underscoring the pressure emanating from the bond market.
The Treasury Department expanded its buyback program to $6 billion in its latest operation. In the secondary market, it purchased $4.078 billion in 20-year and 30-year bonds out of $10.468 billion offered.
On the policy front, CME FedWatch data showed traders assigning a 70% probability to another quarter-point rate hike at the Federal Reserve's October meeting, up sharply from 50% prior to the week's economic data releases. Federal Reserve officials—including Governor Michael Barr, Philadelphia Fed President Anna Paulson, New York Fed President John Williams, and Chicago Fed President Austan Goolsbee—continue to navigate the tightening cycle, while Treasury Secretary Scott Bessent oversees the agency's debt-management operations.
