The yield on the 10-year US Treasury note climbed above 4.8% in September, its highest level since October 2023. The move reflected expectations of persistently higher interest rates from the Federal Reserve, a surge in corporate bond issuance, and mounting concerns over a widening federal deficit.
Geopolitical tensions also added to market pressures. The United States and Iran resumed strikes against each other, prolonging disruptions to energy supplies from GCC countries. The resulting spike in crude and refined product prices intensified inflation risks, especially as several FOMC officials — including Chairman Warsh and a number of regional Federal Reserve presidents — flagged the possibility of a rate hike this month.
At the same time, estimates that AI-related companies have raised $1.5 trillion in debt this year constrained primary dealers’ capacity to absorb government securities, further pushing Treasury yields higher. Additional pressure came from reports that Japan might intervene in foreign exchange markets to curb the yen’s renewed strengthening.
Yields continued to rise even after Treasury Secretary Bessent announced an expansion of the government’s buyback program for long-term securities, a move that would typically be expected to support Treasury prices.
