10-Year Treasury Yield Breaks Above 5% for First Time Since 2007 Ahead of Fed Decision

The benchmark 10-year U.S. Treasury yield crossed the psychologically significant 5% threshold on Tuesday, touching a peak of 5.012%, its highest level since 2007 and a level otherwise only briefly seen in October 2023. The move came as a deepening sell-off in U.S. government debt accelerated ahead of the Federal Reserve's interest-rate decision, with rising expectations that the Fed will hold rates higher for longer to combat persistent inflation.

The 2-year Treasury yield, which is most sensitive to near-term Fed policy, also climbed, rising more than 1 basis point to 4.658%. The 10-year yield later pared some gains, pulling back to around 4.987%, though the breach of the 5% level drew broad market attention. Oil prices advanced alongside yields in the broader markets wrap.

The rise to multi-year highs carries real-world consequences for borrowing costs across the economy, pushing up rates on mortgages, auto loans, credit cards and corporate debt. For the yield to reach its highest point since July 2007, before the Global Financial Crisis, it would need to move beyond 5.02%, a level it briefly touched before retreating.