The 10-year US Treasury yield hit 5.04%, its highest level since 2007, as the Federal Reserve raised interest rates for the first time in three years. The Fed increased its benchmark rate by 25 basis points, setting a new target range of 3.75%-4.00%. Two forces are sustaining these elevated yields: persistent inflation and growing debt supply, with approximately $250 billion in corporate bond issuance expected in 2026. Sixteen of 18 Fed officials forecast at least one more rate hike before the end of 2026. These higher rates increase the cost of mortgages, car loans, and consumer credit, while challenging stock valuations, particularly for growth companies.
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