▲ US Dollar
The yield on the 10-year US Treasury bond has once again crossed the psychological resistance level of 5%, hitting its highest mark since 2007.
According to Bloomberg, the 10-year yield rose by 6 basis points (1 bp = 0.01 percentage points) during trading on the 15th (local time) to reach 5.026%.
This is the highest level since July 2007.
The previous day, the 10-year yield also touched 5.012% during trading, breaking back above 5% for the first time since October 19, 2023.
However, it pared some of its gains and closed at 4.961%.
On October 19, 2023, the 10-year yield also touched 5% during trading before closing below 5%.
Although it was the first time in 16 years since July 2007 that it breached 5%, it lasted for only a single day.
It showed a sharp downward reversal in the days that followed.
However, possibilities are now being raised that a 5% yield may persist this time.
Tensions in the bond market are mounting ahead of the Federal Reserve's rate decision scheduled for the 16th.
Investors expect the Fed to raise short-term interest rates for the first time since July 2023.
According to the Chicago Mercantile Exchange (CME) FedWatch, the fed funds futures market is pricing in a 92.3% probability that the Fed will raise the benchmark interest rate by 0.25 percentage points at the Federal Open Market Committee (FOMC) meeting on the 15th to 16th.
Bloomberg noted that if the Fed does not raise rates or if Kevin Warsh delivers signals that are more dovish than market expectations, bond investors could demand higher yields to hedge against inflation risks.
Bill Hartman, a strategist at BMO Capital Markets, pointed out, "It will be very difficult for the Fed to freeze rates this week without undermining its credibility in curbing inflation," adding, "The market is vulnerable not only to a surprise freeze but also to a 'dovish hike' that sends cautious messages in the dot plot or press conference."
(Photo: AP, Yonhap News)
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