Borrowing costs ticked higher after the 10-year U.S. Treasury yield climbed to 4.926%, its strongest trading level since November 2023. That move lifts costs tied to mortgages, auto loans and consumer credit and comes as U.S. oil prices again passed $100 per barrel, reviving concern that energy-driven inflation could persist.
Yields were broadly higher on Thursday. The two-year Treasury note reached a peak of 4.539%, the highest trading level since July 2024, while the 30-year bond yield advanced more than 6 basis points to 5.346%. One basis point equals 0.01%, and yields move inversely to prices.
Markets had already begun to price in higher rates after Treasury Secretary Scott Bessent said the Treasury will buy back $6 billion of longer-dated government bonds, a development that supported yields on Wednesday and carried through Thursday. The resurgence in oil, driven by fears of a prolonged confrontation in the Middle East between the U.S. and Iran, added to pressure on fixed income by increasing expectations for higher future inflation and interest rates.
The rise in yields came despite a tame wholesale inflation print for August. Producer prices rose 0.4% for the month, matching Dow Jones consensus estimates, while core wholesale prices excluding food and energy increased 0.2%, below the 0.3% forecast. Even so, traders signalled that the oil move outweighed the softness in core wholesale figures.
With wholesale data now in the rearview mirror, investors are shifting attention to consumer price inflation due Friday for a clearer read on household costs. That report, together with next week’s Federal Reserve interest rate decision, will be the primary inputs markets use to reassess the path for rates and the yield curve.
