US 10-year Treasury yields top 5% as energy outlook darkens

The 10-year US Treasury yield has surpassed the 5% threshold for the first time since 2023, driven by the intensifying Middle East conflict and its impact on oil prices. This development has solidified policymakers' move towards a more aggressive stance, with the likelihood of a Federal Reserve rate hike at their upcoming meeting this week now standing at over 90%.

The Federal Reserve, the European Central Bank, and the Bank of Japan are all expected to raise interest rates in response to these energy supply shocks, which have dismantled the "look-through doctrine" that previously assumed such disruptions were temporary. The prevailing sentiment among traders is that inaction could prove to be the greater risk, as tighter policies may cause economic hardship through elevated borrowing costs and reduced growth.

Brief written by urgent.news from Semafor's own syndicated text. Machine-written — may contain errors; check the original before relying on it.