10-Year Treasury Yield Surges 16bps

The yield on the 10-year US Treasury note surged up to 16 bps to above 5.12% on Wednesday, the highest since 2007, as strong economic data and high energy prices consolidated expectations of more rate hikes by the Federal Reserve. S&P Global data showed private-sector activity expanding at its fastest pace in more than five years in September, with both services and manufacturing improving. The survey also showed accelerating inflationary pressures across both sides of the economy. The data were combined with hawkish remarks from Iranian leaders on their conflict with the US and GCC states, dimming hopes that imminent diplomatic improvements could restore energy supply from the Middle East. Treasuries have also been pressured by soaring corporate debt supply, with AI companies issuing over $1.5 trillion this year. Hence, primary dealers showed signs of uneasy demand at auctions, with the latest 5-year note auction tailing 3.1bps, well above recent averages.