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U.S. 10-Year Yield Touches 5.34%, Its Highest Since 2002, as Oil Tops $100

Bond markets are pricing more rate hikes from central banks that have already turned hawkish. A chip rally kept U.S. stocks in the green; Europe fell 1.3%.

By Global Terminal Staff · · 2 min read

A computer monitor displaying a financial chart
Photo: Nicholas Cappello / Unsplash

Why it matters

  • The 10-year Treasury yield is the base for mortgages, corporate bonds and stock valuations around the world.
  • The Fed, the ECB and the Bank of Japan all raised rates in September, and officials are signaling more.
  • Oil above $100 keeps inflation high, which makes rate cuts unlikely any time soon.

Analysis: this piece includes our interpretation of the facts reported.

The yield on the 10-year U.S. Treasury note touched 5.34% on Thursday, its highest level since 2002, before easing to close near 5.24%, Yahoo Finance reported. The 30-year yield traded as high as about 5.67% during the session, its highest since 2002, according to TheStreet.

The move came as oil climbed back above $100 a barrel. Brent crude, the global benchmark, settled at about $100.60, up 2.6% on the day, TheStreet reported. U.S. crude for November delivery rose 2.8% to $92.96.

Stocks held up, but not everywhere

U.S. stocks finished slightly higher. The S&P 500 rose 0.29% to 7,673.89, the Nasdaq Composite gained 0.25% and the Dow Jones Industrial Average was nearly flat at 50,912.33, according to Yahoo Finance. Chipmakers led after Micron Technology reported record results and a stronger outlook. We cover that in a separate story.

Europe did not get the same lift. The STOXX Europe 600 fell 1.30% to 626.65, according to MarketScreener, as higher oil prices and bets on further rate increases weighed on shares.

MarketClose, Oct. 1Change
U.S. 10-year yield5.24%−0.06 pt (high 5.34%)
Brent crude$100.60+2.6%
S&P 5007,673.89+0.29%
STOXX Europe 600626.65−1.30%
Nikkei 22568,956.72+3.30%

Why yields keep climbing

September brought rate increases from three of the four largest central banks. The Federal Reserve raised its target range a quarter point to 3.75% to 4%, its first increase since July 2023, and officials' projections pointed to one more hike this year. The European Central Bank and the Bank of Japan also raised rates. Our central bank roundup has the details.

Inflation is the reason. Core PCE inflation, the Fed's preferred measure, ran at 3.0% from a year earlier in August, according to FXStreet. That was below forecasts but still well above the Fed's 2% goal. Minneapolis Fed President Neel Kashkari said this week that inflation near 3% remains "too high."

Oil is a large part of the problem. Brent is up about 57% from a year earlier, Fortune reported, as conflict in the Middle East disrupts supply. Chinese refiners added to the squeeze this week by suspending fuel exports for October. Read more about that decision.

What comes next

The next test is Friday's U.S. jobs report for September, due at 8:30 a.m. Eastern time. Economists expect a gain of about 98,000 jobs, according to Newsquawk. A strong number could push yields higher again. Our preview explains what to watch.

Sources