The 10-year Treasury yield rose to 4.97% on Monday, just three basis points short of the 5% threshold, as oil prices climbed and traders priced in another rate hike from the Federal Reserve. Brent crude reached $107 a barrel, pushing inflation fears higher and sending investors toward bets on a September hike ahead of the Fed’s policy meeting this week. The 30-year Treasury yield hovered at 5.35%.
Goldman Revises Its Forecast
Goldman Sachs changed its forecast for this week from no change to a rate hike after Friday’s August inflation print. The revision came from the firm’s chief economist, David Mericle. Mericle wrote on Sunday night that the report had little impact on his inflation view but pushed market pricing of a hike to nearly 90%, high enough that the FOMC will likely want to avoid the market reaction that would likely follow from remaining on hold.
What Strategists Are Saying
Some strategists see room for long-dated bond yields to ease if the Fed hikes at its Sept. 15-16 meeting. Veteran strategist Ed Yardeni offered a similar view in a note on Sunday. “A move this week would help restore the Fed’s inflation-fighting credibility and might ease some of the upward pressure on long-term yields,” Yardeni said.
Polymarket bettors have raised the probability of a September rate hike to 80%. That figure reflects the shift in trader expectations since Friday’s data release.
The Global Picture
The rise in yields is not limited to the US. Ten-year yields in Australia and the UK sit above 5%. “Either development would normally be enough to break a global bull market in stocks. Neither has so far,” said Yardeni. “That’s because corporate earnings keep climbing.”
The Carry Trade Angle
The move in global yields may also trace back to an unwinding of the yen carry trade. Investors borrow cheaply in Japan and invest in higher-yielding assets abroad, but that trade loses appeal as Japanese rates rise and the yen strengthens. “That unwinding might partly explain the global bond market selloff,” Yardeni wrote.
Supply Pressure
Governments and corporate giants are issuing debt to fund spending and build out AI infrastructure, adding to the supply of bonds investors must absorb.
The Path Ahead
The 5% threshold for the 10-year Treasury yield looms within reach. Goldman’s revision and the Polymarket odds suggest traders expect action, not patience.
| Instrument | Yield |
|---|---|
| 10-year Treasury (^TNX) | 4.97% |
| 30-year Treasury (^TYX) | 5.35% |
| Country | 10-year yield |
|---|---|
| United States | 4.97% |
| Australia | Above 5% |
| United Kingdom | Above 5% |
| Event | Date |
|---|---|
| Fed’s policy meeting | Sept. 15-16 |
The picture is simple at its core. Oil climbed, inflation fears followed, and bond yields moved with them.
The Fed’s decision this week will settle whether that momentum continues or eases.