If your mortgage quote feels higher every week, this is why: the 10-year Treasury climbed beyond territory not seen since April 2002, tacking on just over 3 basis points to hit 5.327%. The 30-year inched almost 4 basis points higher to 5.678%, its loftiest level in 24 years. The 10-year is the reference point for everything from home loans to auto financing to credit card APRs.
Under the hood, the U.S. manufacturing sector kept growing in September, but the ISM survey flagged stronger price pressures. Its prices index climbed to 77.9, a 6.8 point jump, while backlogs rose 4.6 points to 56.4. Elsewhere on the curve, recent prints showed the 10-year at 5.291% (-0.002), the 1-month at 3.896% (-0.023), the 1-year at 4.499% (-0.046), the 2-year at 4.829% (-0.058), the 30-year at 5.645% (+0.006), the 3-month at 4.109% (-0.029), and the 6-month at 4.303% (-0.037).
Rising government borrowing costs were not just an American story. The upswing has been building for months as investors balk at the political appetite to rein in deficits, inflation sticks above targets, and top central banks lean toward higher policy rates. The Institute of International Finance warned last week that major economies face "persistently large deficits and rising interest expenses - challenges long associated with debt-distressed emerging market sovereigns."
Japan's 10-year yield was recently at 3.126%, the highest since the mid-1990s, and the selling was attributed to a softer yen alongside the Bank of Japan raising rates.
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Europe's benchmarks also pushed higher. Germany's 10-year bund briefly cleared 3.6% before easing to 3.58%. France's 10-year yield jumped by 8 basis points to 4.925%, Italy's rose 10 basis points to 4.706%, and the U.K.'s added 5 basis points to 5.483%.
Fixed income has been trading closely with oil lately. Crude has been unsettled as the U.S.-Israel war with Iran disrupted Middle East exports, and Brent returned to triple digits on Thursday. "We could see [bond] buyers come in effectively to take advantage of those yields, which would have the effect of causing them to go down," said Nomi Prins, founder of Prinsights Global, adding that swings at the long end have been tied to what is happening with oil and inflation.
She also said sovereign wealth funds and central banks, key long-term holders of Treasurys, are unlikely to go along. Prins added, "We could see movement ... in Treasury yields going down if oil prices go down significantly, if there's a resolution" in the Middle East.
Higher long-term yields filter straight into everyday borrowing costs, and today's 10-year level helps set the tone for mortgages, car loans, and credit card rates. With global deficits in focus, inflation above target, and oil back over $100, volatility in longer maturities may stick around. If crude cools or tensions ease, Prins sees room for yields to slip, but for now the takeaway is simple: pricier money is showing up where you actually feel it.
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