Oct 18, 2023 - Economy

Benchmark Treasury yield hits new 16-year high, climbs toward 5%

Data: FactSet; Chart: Axios Visuals
Data: FactSet; Chart: Axios Visuals

The yield on the 10-year Treasury note rose to 4.84% Tuesday, hitting the highest level since August 2007.

By the numbers: The solid retail report and good data on industrial production lifted 10-year yields by 0.13 percentage points Tuesday, a pretty big one-day jump in the Treasury market.

Why it matters: The yield on the 10-year Treasury note — basically what financial markets would charge the U.S. government to borrow for 10 years — forms a foundation for most other borrowing activity.

How it works: Borrowing costs for a range of assets from corporate bonds, to 30-year home mortgages, are tied to the yield on the benchmark Treasury bond.

  • If the U.S. government — the pre-eminent military, financial and economic power on earth — has to pay more, likely everybody else does, too.

The bottom line: The rise in yields over the last six months reflects an emerging higher-for-longer consensus view in the markets, which, in turn, reflects the fact that the U.S. economy has a ton of momentum.

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