10-Year Yield Tops 5%, Highest Since 2007; Fed Decides Wednesday
The 10-year Treasury yield pushed above 5% this morning. It stands at 5.00%, against a 4.99% close on Monday, and touched 5.04% overnight. That is the highest level since July 2007.
The yield has now risen for five straight sessions.
Two things are pushing it. Oil is the first: Brent has climbed to a four-month high. The Fed decision tomorrow is the second.
Money markets put the odds of a 25-basis-point hike above 90%, up from roughly 60% a week ago. It would be the first increase since July 2023.
The market is not reading this yield as a growth story. It is reading it as an inflation and supply story.
August CPI came in at 3.35% year over year, up from 3.30% in July, with core CPI at 2.45%. The second pressure on the long end is issuance: corporate bond sales from AI companies are taking up room on dealer balance sheets.
The second story is in Washington. The Senate votes on cloture for the CLARITY Act today at 2:15 p.m. ET (9:15 p.m. in Istanbul). Sixty votes are needed to move the bill to floor debate. Republicans hold 53 seats, so at least seven Democratic votes are required.
Crypto equities are pricing that carefully. In premarket trading Circle fell 5.6%, while Strategy, Coinbase and Robinhood dropped 3% to 4%. had gained 8.7% on Monday afternoon on the same vote.