Source: Fortune.com
Summary
The 10-year Treasury yield rose above 5% in 2026, marking the first time since 2007. The yield climbed from pandemic-era lows near 0.5% and reflects rising inflation, Fed rate hikes, and economic uncertainty. Investors are concerned about stagflation, a scenario last seen in the 1970s. The Fed faces a difficult balancing act between controlling inflation and avoiding a recession. The yield fluctuated in 2023 but has since climbed again due to geopolitical tensions and energy prices.
Our Reading
The numbers tell one story.
The 10-year yield crossed 5% in 2026, a level not seen since 2007.
Inflation remains above the Fed’s 2% target, with CPI at 3.4%.
The Fed’s rate hikes and economic uncertainty have kept yields elevated.
The market is watching for signs of a Fed pivot, but the path remains unclear.
Author: Evan Null
Where It Started
In 2020, the 10-year Treasury yield fell to a record low of 0.52% as the Fed slashed rates to near zero and bought Treasury securities. The pandemic led to weak economic activity and low interest rates, making government bonds unattractive for investors. However, the situation changed as the economy reopened and demand surged.
The Turning Point
In 2021, the Consumer Price Index began rising rapidly. The Fed initially called the inflation temporary, but by late 2021, it acknowledged that inflation was elevated. The Fed kept rates low but began shifting its stance, signaling that rate hikes were coming. By 2022, the Fed raised rates aggressively to combat inflation.
Inflation Forced the Fed’s Hand
CPI inflation reached 9.1% in June 2022, the highest in over 40 years. Energy prices also surged, contributing to inflation. The Fed raised the federal funds rate to 5.50% by July 2023. The 10-year yield climbed above 4% in 2022 and flirted with 5% in 2023, but it fell as investors anticipated rate cuts.
Then Trump, Tariffs, and War
After Donald Trump’s 2024 election, the 10-year yield jumped as investors anticipated higher deficits and tariffs. In 2025, Trump announced sweeping tariffs, which pushed the yield to 4.79%. The market worried about the impact of tariffs on inflation and government borrowing. The yield remained volatile as investors weighed the risks.
Now the Latest Leg of the Treasury Selloff
The latest rise in the 10-year yield is tied to energy markets. The Iran war disrupted oil supplies, pushing prices above $100 a barrel. This has raised concerns about inflation and economic growth. In September 2026, the yield hit its highest level since 2007, as investors worried about the impact of higher energy prices on the economy.
