Long-term rates are moving from uncomfortable to consequential. The U.S. 10-year Treasury yield is pressing toward 5% amid a global bond selloff, stronger inflation pressure and expectations that central banks may have to stay tighter for longer.
Reuters reports that markets now assign roughly a 72% probability to a near-term Federal Reserve↗ rate increase. The repricing follows higher producer-price data and an energy shock that threatens to keep inflation elevated.
Why 5% matters: Treasury yields anchor a wide range of borrowing costs. Mortgage rates, business financing and valuation models all respond to the risk-free rate. If the 10-year remains near or above that threshold, it can tighten financial conditions without the Fed doing anything else.
The U.S. 10-year Treasury yield approached 5% Friday as global bonds sold off and traders raised the probability of a near-term Federal Reserve rate increase. This is a material update to yesterday's bond-market story.