The 10-year Treasury yield, a benchmark for mortgage rates and a gauge of market confidence, soared to its highest level since 2007 on Tuesday.
As investors assessed the status of the economy and anticipated crucial labour market information that could influence Federal Reserve monetary policy, the note increased by more than 64 basis points to 4.727% as of 8 a.m.
It had not been at that level since Aug. 15, 2007, when it topped out at 4.745%. The yield on 2-year Treasury notes, which is susceptible to speculation over the Federal Reserve’s intended setting of its own benchmark lending rate, increased slightly to 5.115%.
One basis point equals 0.01%, and yields and prices move in the opposite directions.
A government shutdown was avoided by US senators by passing a last-minute spending package on Saturday night, but rising yields still exist today. That has given them more time to complete the required government funding legislation. A shutdown might have had a detrimental impact on both the economy and credit rating of the United States.
Investors also considered the Fed’s upcoming interest rate changes. A further rate increase and persistently high rates have been hinted to by central bank officials.
Source (CNBC)
