FX.co ★ 10-Year Treasury Yield Surges 16bps

The yield on the 10-year US Treasury note jumped 16 bps to above 5.12% on Wednesday, its highest level since 2007, as robust economic data and elevated energy prices reinforced expectations of further Federal Reserve rate hikes. S&P Global data showed private-sector activity in September expanding at its fastest pace in more than five years, with both services and manufacturing improving. The survey also indicated mounting inflationary pressures across both segments of the economy.

These figures coincided with hawkish remarks from Iranian leaders regarding their conflict with the US and GCC states, undermining hopes that near-term diplomatic progress could restore energy supplies from the Middle East. Treasuries also came under pressure from a surge in corporate debt issuance, with AI-related companies alone tapping markets for more than $1.5 trillion so far this year. As a result, primary dealers exhibited signs of strained demand at recent auctions, with the latest 5-year note sale tailing by 3.1 bps, well above recent norms.