US 10-Year Yield Hits 5.1%, Highest Since 2007, Stocks Slide

The yield on the benchmark 10-year U.S. Treasury note surged to 5.11% on Wednesday, its highest level since 2007, before settling at 5.11%. The jump followed a preliminary S&P Global report showing U.S. business activity accelerated in September to its fastest pace since July 2021, while input costs rose at the fastest rate in four years.

Wall Street stocks retreated as higher yields increase borrowing costs across the economy. The S&P 500 fell 0.8%, the Dow Jones Industrial Average dropped 352 points, and the Nasdaq composite sank 1.1%. The yield spike briefly touched 5.14% intraday.

“The economy may have plenty of fuel for more inflation.”

Traders raised bets on further Federal Reserve rate hikes, with the CME FedWatch tool showing a 66% probability of an increase in October, up from 55% a day earlier. The 30-year yield also climbed to 5.4%, a new high for the year.

Oil prices reversed recent declines, with Brent crude rising 3.9% to $103.08 a barrel on concerns that conflict involving Iran could disrupt Middle East supply. Higher energy costs are feeding into business input prices, adding to inflation pressures.