Ten-Year Treasury Yield Reaches 19-Year High Amid Broad Bonds Selloff — Update

By Paulo Trevisani

Investors sold off U.S. government debt, sending Treasury yields to new highs amid mounting concerns about inflation, rising interest rates and the Middle East conflict.

The 10-year benchmark, which has a broad impact on borrowing costs across the economy, rose as high as 5.14% Wednesday, an intraday level last seen in July 2007. It settled at 5.11%. The yield rose as high as 5.302% in 2007.

The bonds selloff comes despite efforts by the Treasury Department to cool down long-term yields by increasing its buying of long-term bonds. The department said Wednesday it will buy back as much as $6 billion in 20-year and 30-year bonds on Thursday.

"Markets are sending a message to Secretary [Scott] Bessent that his plan to suppress yields is not likely to work," Spartan Capital's chief market economist Peter Cardillo said.

He added that worries about the U.S.'s expanding fiscal deficit are also behind the bonds selloff.

"The bond vigilantes are working at full speed ahead," Cardillo said.

The U.S. Treasury auctioned $70 billion of five-year notes at a yield of 5.033%, the highest since an auction held in June 2006 which had a high yield of 5.203%, and amid indications of soft demand. In secondary markets, the five-year traded above 5% for the first time since July 2007.

The two-year tenor, which is more sensitive to expected Federal Reserve moves, rose to 4.94%, the highest since June 2024, as monetary policymakers indicated that interest rates may go higher.

Meanwhile, the 30-year yield reached 5.37%, the highest in 22 years, indicating investors are demanding a higher payout to hold long-term U.S. government debt.

The rise in yields comes amid indications that the U.S. economy is growing fast, which could fuel inflation and drive the Fed to raise rates. September's flash manufacturing PMI was 57, beating a Wall Street Journal consensus forecast of 53.5.

Gross domestic product growth in the third quarter "is likely to be stronger after the last three quarters have averaged 1.4%," Citi economists said in a note. Manufacturing employment "should remain strong," while input prices "rose in September with higher oil and refined product prices, but output prices in both services and manufacturing remain more subdued."

Inflation expectations, as measured by one-year swaps, ticked higher after declining for most of the past two weeks, according to LSEG. The uptick adds pressure on the Fed to hike interest rates.

Futures markets have now priced in 67% odds of a hike in October, up from 55% Tuesday, according to CME.

Oil prices, another driver of inflation, also advanced Wednesday on rising tensions in the Middle East. Brent was up 4% to $103 a barrel.

Borrowing costs also increased in Europe, where Germany's 10-year benchmark yield rose to 3.54% from 3.49%.

The rise in yields came in tandem with a stronger U.S. dollar, as the WSJ Dollar Index rose 0.5% to 96.75, its highest level since July.

Write to Paulo Trevisani at paulo.trevisani@wsj.com

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September 23, 2026 16:08 ET (20:08 GMT)