US Treasury yields crack 5% as strong data lift Fed hike bets — and mortgage rates top 7%

US Treasury yields crossed a closely watched psychological line of 5% on Thursday, 24 September, as markets priced a higher chance of another Federal Reserve rate increase next month, Reuters reported.

What moved

Carmel Crimmins wrote for Reuters that, aside from the two-year note, US Treasury yields were trading above 5%. The catalyst was strong US business-activity data showing the fastest expansion in more than five years and a surge in new orders. That mix left investors betting the Fed would tighten again soon.

Housing and global spillover

The jump in the 10-year Treasury yield pushed a widely followed US mortgage borrowing rate above 7%, adding pressure on housing affordability. Abroad, Japan’s 10-year government bonds sat at a 30-year high. France’s 10-year yield reached its highest level in more than 18 years, and France paid a 111-basis-point premium over Germany.

SoftBank and OpenAI financing

SoftBank raised a record junk-bond package of about $11.1 billion equivalent in dollars and euros to fund its OpenAI bet, including a 7.5-year bond priced at a 9.75% yield. SoftBank’s five-year credit-default swap widened to more than 400 basis points, compared with about 280 in June, according to Reuters.

Historical echo

Reuters noted that the last time the US 10-year yield broke above 5%, the MSCI world equity index roughly halved before the global financial crisis — a reminder of how markets have treated that threshold in the past, not a forecast.