US 10-year Treasury yield briefly surges past 5% on sky-high diesel prices
The US 10-year Treasury yield on Monday briefly surged past 5% for the first time since 2023 — goosed by rising diesel prices in a rally that could boost borrowing costs for mortgages and auto loans.By approximately 3:20 p.m.ET, the US 10-year Treasury yield had dipped back down to 4.967%.
The 20-year Treasury yield was also elevated at 5.376%.The Dow Jones Industrial Average fell 92 points, or 0.2%, while the S&P 500 and Nasdaq slumped 0.3% each.Concerns around rising energy prices amid the war in Iran and fears that the Fed could hike interest rates this week have fueled a weekslong bond sell-off.As traders dumped bonds, Treasury yields – the annual interest investors are paid for holding government debt – climbed higher.And on Monday, diesel prices hit a record high of $6.23 a gallon, according to AAA, as the Middle East conflict showed no signs of slowing. Economists have warned that higher diesel prices could bleed through to the rest of the economy and worsen inflation, as food, apparel and other everyday goods are often transported via heavy trucks that run on the pricey fuel.Nic Puckrin, cross-asset analyst and founder of Coin Bureau, said inflation risks from the Strait of Hormuz crisis can erode the value of bonds, which is why investors are demanding higher yields.“The 10-year Treasury yield topping 5%, even if briefly, is more consequential for US households than what the Fed does on Wednesday,” he told The Post Monday.“That’s the rate that sets your mortgage rate, which is why they are getting close to 7%.
If the 10-year yield pushes higher, 7% mortgages are in the cards.”Treasury Secretary Scott Bessent has tried to assuage traders, announcing plans to buy back up to $6 billion of government debt, triple the normal amount – but investors are worried it won’t be enough as long as the war lasts and continues to fuel inflation.Treasury yields are hovering around levels rarely seen since 2007, threatening to send mortgage rates e...