The yield on the 10-year U.S. Treasury climbed to 4.943% on Thursday, up from 4.836% on Wednesday, making this its highest close since October 2023, putting it within striking distance of the 5% threshold for only the second time since the 2008-09 financial crisis.
The increase comes amid rising oil prices, a firm wholesale inflation report, and President Donald Trump‘s pledge to send $5,000 checks to Americans if Republicans retain Congress, a promise that could add more than $1 trillion to the federal deficit.
Why It Matters
The 10-year yield influences borrowing costs across the economy, including mortgages, student loans and corporate debt. As it rises, loans become more expensive for homebuyers, students and businesses alike, which can slow spending.
The average 30-year fixed mortgage rate jumped to 7.07% Thursday, Mortgage News Daily reported. Separately, Freddie Mac’s weekly Primary Mortgage Market Survey put the 30-year fixed rate at 6.76%, up from 6.71% the prior week.
“The 30-year fixed-rate mortgage averaged 6.76% this week,” said Sam Khater, Freddie Mac’s chief economist. “Aspiring buyers should remember shopping around for the best mortgage rate and getting multiple quotes can potentially save them thousands.”
Stocks Retreat
“Increases in Treasury yields are unambiguously bad for stocks,” Jay Hatfield, chief executive officer at Infrastructure Capital Advisors, told WSJ.
The S&P 500 fell 0.58% Thursday, while the Dow Jones Industrial Average declined 0.60%. The Russell 2000 declined 1.04%.
Fed In Focus
Brent crude rose 6.3% to $107.63 a barrel Thursday, pushing rate-hike bets higher. Interest rate futures showed a 67.4% chance of a Fed hike next week, up from 61% Wednesday, according to CME Group’s FedWatch tool’s projections.
“The bond market is saying very clearly that the Fed is going to raise rates,” Ray Remy, vice chairman at Daiwa Capital Markets America, told WSJ.
The move builds on a months-long climb: the 10-year yield had already touched 4.85% earlier in the week after Treasury Secretary Scott Bessent announced plans to triple the size of long-term bond buybacks to as much as $6 billion per operation. The Treasury ultimately bought about $5.2 billion in long-dated bonds Thursday, falling short of the maximum target.
Disclaimer: This content was produced with the help of AI tools and was reviewed and published by Benzinga editors.