U.S. 10-Year Treasury Yield Nears 5% as Oil Fuels Inflation Fears — 3rd Update

By Emese Bartha and Jessica Coacci

Oil prices surged fueling a global bond market sell off Thursday, with the 10-year Treasury yield closing in on 5%.

Oil prices topped $102 a barrel in the U.S. and global benchmark Brent hit $107. U.S. wholesale inflation rose 0.4% in August, while existing home sales in August fell to their lowest level in more than a year. But market participants will focus on Friday's consumer price index print. Economists polled by The Wall Street Journal are expecting consumer-price inflation to increase 0.4% in August up from 0.1% in July.

The elevated yields put focus on the first Treasury buyback with increased volume. The Treasury Department bought $5.2 billion of longer-term bonds at its afternoon buyback operation-less than the maximum amount of $6 billion that it was willing to buy. Treasury yields extended their gains after the operation.

The 2-year yield rose 0.122 percentage point to 4.548%. The 30-year yield rose 0.075 percentage point to 5.360%, its highest yield since June 2004. While the benchmark 10-year yield rose 0.104 percentage points to 4.943%, its highest level since October 2023.

The U.S. Treasury auction of 30-year maturities Thursday afternoon briefly provided some support to the bond market, signaling strong demand. The monthly auction sold $22 billion in bonds. The high yield at the auction was 5.308%, the highest level since August 9, 2001, when it was 5.52%.

Rate hike projections are nearing 70% for the Federal Reserve's interest rate meeting next week, according to CME's FedWatch tool. However, a lower-than-expected CPI print Friday could strengthen the case for holding rates steady.

"Barring a surprise in the CPI number on Friday, we expect the economic data to support the case for a hold at next week's Federal Open Market Committee meeting,' wrote Grace Zwemmer, U.S. economist at Oxford Economics.

Inflation worries also rippled throughout global markets. The European Central Bank raised interest rates for the second time this year, with resurgent energy prices sparked by the war in Iran intensifying price pressures. The 25 basis-point increase was largely what market participants were expecting.

The U.K. 10-year gilt sits around 5.378%, above 5.295%, the highest level since 2007. The German Bund 10-year yield sits around 3.496%, above 3.451%, its highest since 2011.

The increased buyback volume will be in effect for the remainder of the Treasury's current refunding quarter, through Nov. 4. Treasury said it would provide more information about future buyback sizes at the next quarterly refunding, scheduled for Nov. 4.

Write to Emese Bartha at emese.bartha@wsj.com and Jessica Coacci at jessica.coacci@wsj.com

(END) Dow Jones Newswires

September 10, 2026 16:48 ET (20:48 GMT)