Market Extra: Why a rising 10-year Treasury yield is rattling financial markets as it nears 4%

by | Sep 27, 2022 | Stock Market

The 10-year Treasury yield, a vital benchmark that influences a vast array of consumer borrowing costs, is on its way to hitting 4% for the first time in at least 12 years — a development that’s starting to ripple across financial markets. The rate
soared to as high as 3.988% on Tuesday — more than twice as high as where it started the year — as financial-market participants came on board with the higher-for-longer view on interest rates, driven by central banks’ imperative need to bring down inflation. The 10-year rate hasn’t been 4% or higher on an intraday basis since April 5, 2010. The last time it finished the New York session at or above that level was in Oct. 15, 2008, according to Tradeweb data.Typically, a rising 10-year yield is seen as a sentiment signal about brighter U.S. economic prospects. This time around, however, “it’s a wake-up call that inflation won’t be self-curing the way it has been in the last 30 years,” said Chris Low, chief economist at FHN Financial in New York. The rate is up five of the past seven trading days and is on pace for its largest gain over the first three quarters of a calendar year since 1981. On Tuesday, it ended the New York trading session at a 12-year high of 3.963% — rising closer to the 4% level already reflected elsewhere in the Treasury market. Meanwhile, the 30-yea …

Article Attribution | Read More at Article Source

Share This