[Edaily Reporter KIM YOON JI ] On the 14th (local time), the yield on the 10-year U.S. Treasury note surpassed the “psychological threshold” of 5%, drawing market attention to whether this rise will be “sustained over the long term.”
According to The Wall Street Journal (WSJ), the yield on the 10-year U.S. Treasury note rose as high as 5.012%—its highest intraday level since 2007—but later retreated, closing at 4.960%. This movement mirrors the situation on October 23, 2023, when the 10-year yield also reached 5% during the morning but plummeted to just over 4.8% by the close of trading.
The Wall Street Journal noted, “This is a significant milestone that is prompting investors to seriously consider whether the bond market is entering a new era,” adding, “While the aftermath of the COVID-19 pandemic was the cause back in 2023, this time, the main driver is a war with no end in sight.” U.S. Treasury Secretary Scott Bessent is taking extraordinary measures, such as expanding bond buybacks, to curb the rise in Treasury yields, but so far, no clear results have emerged.

The fact that the yield on the 10-year U.S. Treasury note—which sets the benchmark for interest rates across the economy—continues to hover in the 5% range could have a massive impact on both consumers and businesses. This means they must pay higher interest rates to raise funds; as a result of recent rate hikes, mortgage rates have approached 7%.
If yields definitively surpass 5%, borrowing conditions could resemble those of the 2000s, when the 10-year yield occasionally remained above 5% for several months. Some investors are even recalling the 1990s, when the 10-year yield hovered around 5% for several years.
If high long-term Treasury yields persist, the U.S. government’s borrowing costs will rise significantly. The U.S. government is already spending more on interest payments than on defense. Republican Rep. David Schweikert (Arizona) wrote on social media, “Today’s numbers should scare Congress.”
Markets expect the 10-year yield to surpass 5% and continue rising over the next few weeks or months. First, investors are far more optimistic about the resilience of the U.S. economy than they were before. They believe that even with the 10-year Treasury yield at around 5%, the economy will not slow down rapidly and can withstand it. Furthermore, with international oil prices exceeding $100 per barrel due to tensions in the Middle East, many believe that inflation will also remain high.
Greg Peters, Co-Chief Investment Officer (CIO) at PGIM Credit, said, “It’s hard to find a reason for interest rates to fall other than a traditional recession,” adding, “The conditions are quite well-established for interest rates to rise further or remain at high levels.”
President Trump has repeatedly called on the Federal Reserve (Fed) to cut interest rates, but Fed Chairman Kevin Warsh finds himself in a difficult position as expectations for a rate hike have recently gained traction. With recent inflation indicators coming in strong, investors overwhelmingly expect the Fed to raise short-term interest rates at the Federal Open Market Committee (FOMC) meeting on the 15th and 16th, followed by further rate hikes.
Investors’ expectations regarding short-term interest rates also play a key role in determining long-term Treasury yields. Over the past few years, the 10-year Treasury yield has generally fluctuated between 4% and 5%. Although it fell below 4% just before the U.S. and Israel launched their first attack on Iran in late February, it has since continued on an overall upward trend. This is because energy prices rose as Iran showed signs of restricting maritime shipping through the Strait of Hormuz, which in turn strengthened expectations of a Fed rate hike.
Brent crude, the international benchmark for oil prices, surged by about 9% last week. This was influenced by the fact that the Iran-backed Houthi rebels have effectively taken control of another key maritime strategic point on Yemen’s west coast. Although Brent crude gave back some of its early gains today, it still closed up 1% at $105.68 per barrel.
Some investors view the recent rise in Treasury yields as reflecting, to some extent, a return to economic normalcy. In other words, they see the economy returning to the conditions that existed before the 2010s and early 2020s—a period characterized by massive central bank bond purchases and ultra-low interest rates—and before the 2008 global financial crisis.
However, the U.S. federal government’s total debt currently exceeds $40 trillion—roughly double the level of a decade ago. As federal debt increases, the supply of U.S. Treasuries in the market also rises. This can drive down bond prices and push up Treasury yields.
Many analysts note that the stock market’s continued strength, fueled by investor enthusiasm for AI, is partially offsetting the burden that high interest rates place on the economy. Generally, when interest rates and borrowing costs rise, corporate investment can slow down.
Some analysts suggest that if the Fed raises interest rates as expected, it could actually help keep long-term Treasury yields in check. Megan Swiber, U.S. interest rate strategist at Bank of America (BofA), said, “I believe that if the Fed raises rates this week and sends a message that it will take all necessary measures to control inflation, it could actually help lower long-term rates.”