Short answer: The 10-year Treasury yield closed at 5.05% on October 28, back above 5% for the first time since October 21, according to Treasury data. It rose after the Fed held rates but said growth was stronger, and Thursday’s GDP and inflation reports gave bond investors more to chew on.
| Date | 2-year | 10-year | 30-year |
|---|---|---|---|
| October 21 | 4.81% | 5.13% | 5.42% |
| October 22 | 4.65% | 4.96% | 5.29% |
| October 27 | 4.70% | 4.99% | 5.30% |
| October 28 | 4.67% | 5.05% | 5.37% |
Why the 10-year Treasury yield rose
The Fed held its target range at 3.75% to 4% on Wednesday in a 10-2 vote. Governor Lisa Cook and Cleveland Fed President Beth Hammack wanted a quarter-point hike, and the statement upgraded its view of growth, 24/7 Wall St. reports. Our explainer on the Fed hold covers what it means for savings, credit cards, and mortgages.
Long yields rose while the 2-year slipped from 4.70% to 4.67%. That pushed the gap between the 2-year and 10-year to 38 basis points from 29. A wider gap means bond buyers want more pay for lending long term.
The 10-year Treasury yield this month
The 10-year Treasury yield closed at 5.31% on October 5, according to 24/7 Wall St. It was at 5.13% on October 21, then dropped to 4.96% the next day, Treasury data shows. Wednesday’s 5.05% is the first close above 5% since October 21. For the latest level and a plain-English explainer, see our 10-year Treasury yield page.
What Thursday’s reports added
The Bureau of Economic Analysis said the economy grew at a 3.4% annual rate in the third quarter. Its September report showed prices up 3.6% over 12 months. Strong growth plus high inflation is the combination that keeps long-term yields up. CNBC reported Thursday that the 10-year was hovering above 5% after both reports. We will update the table when Treasury posts Thursday’s close.
What the bond market is saying
Some investors think the Fed has not gone far enough. DoubleLine’s Jeffrey Gundlach argued that the Fed should be raising rates, expects headline inflation to approach 4%, and sees a December hike as likely, according to 24/7 Wall St. Others see a bargain. Ariel Investments’ Charlie Bobrinskoy said on Tuesday that bond buyers now have decent expected returns for the first time in two decades.
What it means for borrowers
Mortgage lenders price home loans off long-term yields, not the Fed’s overnight rate. The daily 30-year mortgage index rose to 7.35% from 7.33% on Wednesday, 24/7 Wall St. says. Anyone waiting for a Fed cut to bring mortgage rates down should watch the 10-year first. Our look at Treasury yields before the Fed shows where bond markets stood a day earlier.
Editor’s take
The Fed controls one short rate. Bond investors set the rate that decides your mortgage, and they are not waiting for permission. A 10-year yield that keeps coming back to 5% tells you the market doubts that inflation is going away soon.
