The benchmark 10-year US Treasury yield has climbed to its highest level since 2007, hitting 5.02 percent on Tuesday. The yield, which rose as high as 5.04 percent before easing back, had briefly touched 5.011 percent on Monday, its highest level since October 2023. This surge marks the latest milestone in a bruising global bond selloff and a deepening sell-off in U.S. government debt.
The rise is driven by mounting debt and intensifying worries about energy-driven inflation and surging energy prices. Oil and 10-year Treasury yields are currently moving in near lockstep, with a correlation that is at its strongest since 2019.
The spike in yields has pushed borrowing costs deeper into territory that could expose some of the financial system's weakest links. These conditions contributed to a drop in US stocks at the open as the benchmark yield reached its multi-decade high.
These movements come ahead of a Federal Reserve interest-rate decision on Wednesday, when traders expect an increase.