Treasuries-10-year Treasury yield nears 5% ahead of Fed decision
TLT•Upcoming Treasury auctions
Demand for longer-dated debt will also be tested when the Treasury sells $13 billion in 20-year bonds on Tuesday. The U.S. government will also sell $19 billion in 10-year Treasury Inflation-Protected Securities on Thursday.
Yields and supply pressure
The 2-year note yield US2YT=RR, which typically moves in step with Fed interest rate expectations, rose 0.54 basis points to 4.649%. The yield on benchmark U.S. 10-year notes US10YT=RR rose 0.84 basis points to 4.983%.
Rising interest rate expectations, heavy corporate and government debt supply, a strong growth outlook and concerns about the long-term U.S. fiscal trajectory have combined to send yields higher in the past month.
“The budget and the deficit and the overall makeup of our debt continues to grow,” said di Galoma.
The 5% level for 10-year notes will be seen as a key test on whether economic and equity market strength are able to sustain the higher rates. The 10-year yields underpin mortgages and other loans and housing activity has remained subdued amid higher rates even as other sectors of the economy such as the tech sector grow.
