NEW YORK — The yield on the 10-year U.S. Treasury note surged to its highest level in about three years. Bargain hunting briefly steadied the market, but Wall Street expects further gains given the inflation trend and the broader macroeconomic backdrop.
In the New York bond market on the 2nd, the 10-year Treasury yield, the global benchmark, rose as high as 4.818% intraday, its highest in 34 months since Nov. 1, 2023. The two-year yield, which is sensitive to monetary policy, also climbed to 4.410% intraday, the highest since January last year. The 30-year yield jumped to 5.296%, again approaching the previous peak of 5.337% recorded on the 18th of last month.
Treasury yields, which had risen for five straight sessions through the previous day, regained some stability late in the session as bargain buyers stepped in. The two-year yield closed at 4.371%, down 0.023 percentage point; the 10-year at 4.782%, down 0.014 percentage point; and the 30-year at 5.260%, down 0.007 percentage point.
The intraday reversal is attributed partly to demand from investors seeking to buy bonds cheaply after the prolonged run-up. In particular, President Donald Trump's remark at the White House that renewed strikes on Iran would not go on for very long spurred bargain buying.
Caution voiced by New York Federal Reserve Bank President John Williams about raising rates also helped calm the market. In an interview with CNBC, Williams said the surge in Treasury yields reflected a strong economic outlook and that inflation was gradually slowing as some of the impact of tariffs faded. A report from payroll processor Automatic Data Processing (ADP) showing that U.S. private-sector hiring rose by 38,000 last month from the previous month, the smallest gain since January this year, also improved sentiment in the bond market.
Wall Street expects yields to keep rising as international oil prices, the root cause of inflation, trend higher and government debt levels around the world grow. Major central banks including the European Central Bank (ECB) and the Bank of Japan (BOJ) have signaled possible rate increases this month.
