US Treasury Yields Surge Past 5% as Tight Labor Market and Fed Rate-Hike Bets Hammer Gold and Bonds

US 10-year Treasury yields climbed above 5% on September 24, driven by a combination of strong economic data, elevated energy prices, and growing expectations that the Federal Reserve will deliver another interest-rate increase. Gold fell to a one-week low, slipping below both its 50-day and 100-day simple moving averages as the dollar strengthened and higher yields eroded the appeal of the non-yielding metal.

The week's initial jobless claims print reinforced the resilient labor market narrative. Claims for the week ending September 19 came in at 197,000, below the consensus estimate of 200,000-201,000 and slightly below the prior week's revised reading of 198,000. Continuing claims for the September 12 week rose just 2,000 to 1,719,000, well under the 1,740,000 estimate, leaving no sign of meaningful labor-market deterioration for the Fed to lean on.

Strong US business activity data released earlier in the week had already sharpened rate-hike bets, and hawkish signals from Fed officials compounded the pressure on rate-sensitive assets. Investors were also weighing Japan's decision to raise interest rates following pressure from US Treasury Secretary Scott Bessent, who had publicly stated his belief that Japanese authorities would act to strengthen the yen. Japan's borrowing costs hit a 30-year high in the wake of that move, adding another layer of turbulence to global bond markets. With Japanese investors holding roughly $1.1 trillion in US Treasuries, any shift in their domestic rate environment carries direct implications for US debt demand.