Homebuyers, Consumers About To Pay Even More As Key Indicator Reaches Grim Milestone

A key benchmark for borrowing costs across the U.S. economy crossed 5% Monday, reaching a level the instrument has not reached since October 2023.

The 10-year Treasury yield rose above 5% Monday as investors confronted higher oil prices, persistent inflation and the prospect of additional Federal Reserve interest-rate hikes. The 10-year Treasury influences prices on major lines of credit, ranging from mortgages to auto loans to credit cards.

Federal Reserve data compiled by the St. Louis Fed show the yield averaged 5.10% in June 2007 and 5.00% in July 2007 before falling to 4.67% in August, marking the last sustained period around 5%.

The move matters far beyond Wall Street. The 10-year Treasury serves as a benchmark for borrowing costs throughout the economy, influencing mortgage rates and corporate borrowing. The average 30-year fixed mortgage rate reached 6.76% as of Thursday, up from 6.35% a year earlier, according to Freddie Mac.

The selloff comes as investors contend with higher energy prices and renewed inflation concerns ahead of the Federal Reserve’s two-day meeting starting Tuesday. An 85% majority of economists surveyed by Reuters expected the Fed to raise its benchmark interest rate by a quarter percentage point Wednesday, which would mark its first increase since July 2023.

Oil prices have added to those concerns. Brent crude climbed above $107 per barrel Monday after gaining nearly 9% as disruptions tied to the Iran war continued to threaten energy supplies, according to Reuters.

Those pressures were colliding with the federal government’s growing financing needs. The national debt surpassed $40 trillion in August, while large federal deficits and heavy government and corporate bond issuance contributed to investor concerns in the Treasury market.

The 10-year yield began 2026 around 4.15% before falling below 4% in February.