Treasury Yields at Highest Levels Since 2007 on Price Concerns
US five- and 10-year yields rose to the highest levels since 2007 after hotter-than-anticipated inflation data in Canada and rising oil prices added to global concerns about resurgent price pressures.
The five-year Treasury yield rose as much as 7 basis points to 4.52%, the 10-year as much as 6 basis points to 4.365%. The two-year note’s yield came within a basis point of a new multiyear high.
The shifts reflect the bond market recognizing that the Federal Reserve will be keeping its policy rate high for an extended period, according to Gregory Peters of PGIM Fixed Income.
“The market is finally coming to a realization, after fighting the last 18 months, that rates are indeed higher and we are not going back to a pre-pandemic type level,” the co-chief investment officer said on Bloomberg TV. He added that investors should watch where the Fed sets its peak rate for this cycle in order “to get a better understanding of whether they believe terminal rates are higher.”