Expensive energy returned the yield on 10-year US bonds to 5%

The yield on 10-year US government bonds during trading on September 14 once again exceeded 5% amid a sell-off of debt securities, record diesel prices and fears of a new acceleration of inflation. The 5% level is an important benchmark for the cost of credit in the world's largest economy.

This is reported by The Wall Street Journal.

During trading, the yield on 10-year US Treasuries rose to about 5.01%, then retreated below the psychologically important level. According to official data from the US Treasury Department, at the end of the trading day the yield was 4.97%.

The main factor behind the new jump was energy. The price of Brent was approaching $110 per barrel after supply disruptions in the Middle East, and the average retail price of diesel fuel in the US set a record at about $6.23 per gallon.

Diesel is particularly important for inflation, as it is widely used in freight transportation, agriculture and industry. Its rise in price increases transportation costs for businesses and over time can be passed on to higher prices for goods.

Investors fear that prolonged increases in energy prices will complicate the Federal Reserve's task of containing inflation. Market movement is taking place just before the Fed's next decision on interest rates.

Rising yields mean falling prices for government bonds and at the same time increase the cost of borrowing throughout the US economy. The 10-year Treasury rate is one of the main benchmarks for mortgages, corporate loans and other long-term financial instruments.

Pressure is already visible in the housing market. The average rate on a 30-year fixed mortgage in the US rose to about 7.17% - the highest level in almost two years. Further increases in government bond yields could further worsen housing affordability and dampen activity in the real estate market.

The 5% level also has symbolic significance for financial markets. The last time the 10-year yield approached this level was in 2023, and it had sustainably held above it before the global financial crisis.

In addition to inflation, the US debt market is pressured by large volumes of government borrowing and increased supply of corporate debt. Therefore, even a possible easing of Fed policy does not guarantee a rapid decline in long-term rates.

Based on materials: The Wall Street Journal, MarketWatch, US Treasury Department