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The five-year Treasury yield broke above 5% for the first time since 2007, while the 10-year yield climbed nearly 17 basis points to 5.13%. The 30-year yield reached about 5.4% as stronger US economic data, higher oil prices and weak auction demand intensified the bond selloff.
Why it matters
A $70 billion five-year note auction cleared at 5.033%, more than 3 basis points above expectations and the second-weakest result in data going back to 2018. The result signals that investors are demanding higher yields to absorb government debt as the rate outlook shifts.
Market impact
Rate swaps now fully price three additional 25-basis-point Fed hikes over the next year, with significant hedging for a fourth. The repricing has already pressured risk assets, with the S&P 500 falling 0.8% as higher borrowing costs weigh on equities.
Frequently asked questions
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How high did the five-year Treasury yield rise?
The five-year Treasury yield rose above 5% for the first time since 2007.
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What happened to the 10-year and 30-year Treasury yields?
The 10-year yield climbed nearly 17 basis points to 5.13%, while the 30-year yield reached about 5.4%. Both approached their highest levels since 2007.
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Why did the five-year Treasury auction add to bond-market pressure?
The $70 billion auction cleared at 5.033%, more than 3 basis points above expectations. It was the second-weakest result in data going back to 2018.
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How many additional Fed rate hikes are priced into swaps?
Rate swaps fully price three additional 25-basis-point Fed hikes over the next year, with significant hedging for a fourth.
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How did the bond selloff affect US equities?
Higher yields weighed on risk assets, and the S&P 500 fell 0.8% as borrowing costs and rate expectations moved higher.
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