The U.S. 10-year Treasury yield has climbed to 5.012% intraday as surging oil prices revived inflation concerns before the Federal Reserve’s Sept. 16 rate decision.
Summary
- U.S. 10-year Treasury yield reached 5.012% during Monday trading, its highest intraday level since 2007.
- Treasury’s official par yield finished Monday at 4.97% after the benchmark reversed from its peak.
- Brent crude approached $110 intraday Monday before settling at $105.68 as supply fears eased slightly.
- Federal Reserve begins its two-day meeting Tuesday, with Wednesday’s policy statement scheduled for 2 p.m.
- Nasdaq Composite closed 0.56% lower Monday while Philadelphia’s semiconductor index dropped 5.9% amid AI concerns.
The Wall Street Journal, citing Tradeweb data, reported that the benchmark yield reached 5.012% during Monday morning trading, its highest intraday reading since 2007, before falling back below the 5% level.
Official closing data showed a less extreme reading. The U.S. Treasury’s daily yield curve data put the 10-year par yield at 4.97% on Sept. 14, compared with 4.96% on Sept. 11 and 4.79% at the start of September.
U.S. 10-year Treasury yield retreats from 5.012%
Bond prices recovered after the early selloff, pulling the market yield away from its session high. Tradeweb data cited by the Journal put the later close near 4.96%, while the Treasury’s own par-yield methodology produced the 4.97% official daily figure.
The move followed several weeks of pressure across global government bond markets. Reuters reported that energy costs, federal borrowing requirements and expectations for tighter monetary policy had pushed yields upward before Monday’s brief break through 5%.
Longer-dated borrowing costs remained elevated as well. Treasury data showed the 20-year yield at 5.37% and the 30-year yield at 5.34% on Sept. 14. The 30-year rate had stood at 5.27% on Sept. 1.
Higher Treasury yields have coincided with pressure on crypto markets. As crypto.news previously reported, Bitcoin traded near $76,800 on Sept. 11 as rising oil prices, U.S. inflation and higher government bond yields reduced demand for risk assets.
crypto.news examined how a September Fed rate increase could affect Bitcoin and other cryptocurrencies as Treasury yields compete with non-yielding or volatile assets for investor capital.
Oil surge keeps inflation concerns in focus
Oil supplied the main fresh pressure on bond markets Monday. Brent crude climbed as much as 5% to roughly $109.80 before giving back much of its advance, according to Reuters. The contract later settled at $105.68 a barrel.
Saudi Arabia’s East-West pipeline remained at the center of the supply concerns after attacks forced the route offline. The pipeline allows Saudi crude to bypass the Strait of Hormuz and can reroute around 4 million barrels per day, equal to roughly 4% of global supply, Reuters reported.
Early Tuesday trading showed that the energy pressure had not disappeared. Brent futures rose $1.24, or 1.18%, to $106.93 a barrel, while West Texas Intermediate gained $1.29 to $102.65. Renewed Houthi attacks on Saudi Arabia and postponed talks between Gulf states and Iran kept supply concerns active.
Mitsubishi UFJ Bank analyst Yokoo Akihiko told Reuters that markets remained focused on whether “higher crude oil prices could add to inflationary pressures.” The assessment is an analyst view, while the duration of the pipeline outage and future oil-price path remain uncertain.
Energy prices have already appeared in the Fed’s own explanation of inflation. At its July meeting, the Federal Open Market Committee said inflation remained above its 2% objective partly because supply shocks had raised prices in sectors including energy.
Nasdaq falls as AI warnings hit semiconductor shares
U.S. stocks ended Monday lower while bond yields and oil remained elevated. The Nasdaq Composite declined 0.56% to 26,186.41, the S&P 500 fell 0.48% to 7,619.94, and the Dow Jones Industrial Average lost 0.29%, according to Reuters.
Semiconductor shares faced much steeper losses. The Philadelphia Semiconductor Index dropped 5.9% as Nvidia, Broadcom, Micron and other AI-linked stocks sold off following calls from industry executives for slower development of advanced artificial intelligence systems.
The technology selloff occurred alongside the bond-market pressure, but Reuters identified separate concerns behind the chip decline. Executives including Anthropic CEO Dario Amodei and OpenAI CEO Sam Altman had raised safety concerns surrounding advanced AI development, prompting investors to reassess assumptions about future AI spending.
The combination supported the U.S. dollar during Monday and early Tuesday trading. OCBC analyst Christopher Wong told Reuters that “higher oil, higher U.S. yields and weaker risk appetite” helped lift the currency.
Federal Reserve decision follows Wednesday
The Federal Reserve has begun its scheduled Sept. 15-16 policy meeting with its target federal funds range currently at 3.50%-3.75%. The central bank maintained that range at its July meeting by a 9-3 vote, while three officials preferred a 25-basis-point increase.
Market expectations have moved sharply since then. Reuters reported Tuesday that CME FedWatch pricing placed the probability of a quarter-point increase at roughly 93%, which would lift the target range to 3.75%-4.00%. The probability is market pricing and does not represent a Federal Reserve commitment.
Crypto markets are approaching the decision with yields still close to 5%. As crypto.news reported after the August CPI release, Bitcoin rebounded above $78,000 on Sept. 11 even as traders increased expectations for a September rate increase. A separate crypto.news report on Treasury yields and Bitcoin identified the Fed decision and Treasury-market conditions as key variables for the asset’s next move.
The Federal Reserve’s official calendar schedules the policy statement for 2 p.m. ET on Wednesday, Sept. 16, followed by the FOMC press conference at 2:30 p.m. The meeting will include an updated Summary of Economic Projections.
