Treasury Yields Surge Above 5%, Raising Pressure on Stocks and Borrowers

U.S. Treasury yields climbed to multiyear highs, with the 10-year yield topping 5.17% on Thursday, CNBC reported, and the 30-year yield reaching its highest level since 2004, according to Yahoo Finance. The Wall Street Journal attributed the move to economic data and increased expectations of Federal Reserve rate increases.

The 10-year yield was below 4.8% two weeks earlier and below 4.6% at one point in August, CNBC reported. Its sharp rise has increased concern on Wall Street because the benchmark influences borrowing costs ranging from mortgages to corporate financing. Mortgages have reached about 7%, according to UBS economist Paul Donovan.

Saxo’s strategy team said yields on all benchmark U.S. Treasury securities were at or above 5%, while the average yield across the $32 trillion Treasury market had risen to 5.05%. Higher rates are raising refinancing costs for consumers, companies and governments even as stock markets in Europe and Asia ticked up modestly and U.S. futures were up marginally before the open.

John Roque, head of technical analysis at 22V Research, told CNBC that similarly rapid increases in the 10-year yield have historically accompanied financial-market disruptions. He urged caution and identified regional banks as an area to watch. The SPDR S&P Regional Banking ETF was nearly 10% below its recent high.

Traders also cite debt-funded artificial-intelligence data-center projects and private credit as possible pressure points. Fortune reported that companies face a wave of corporate debt refinancing as rates go over 5%.