U.S. 10-Year Treasury Yield Hits 5% Again as Curve Flattening Draws Closer Scrutiny

News Editor

2026-09-14 14:46:40

The U.S. 10-year Treasury yield touched the 5% threshold on Monday, returning to that level for the first time since 2023, according to BlockBeats. The move came as selling pressure in the Treasury market intensified against the backdrop of the Iran conflict, higher oil prices, and continued pressure from the U.S. fiscal deficit. Long-term borrowing costs have moved up, with the 30-year fixed mortgage rate climbing back above 7%, extending the impact of elevated rates into the real economy. The report said markets are paying even closer attention to the rapid flattening of the yield curve. Last week, the spread between 2-year and 10-year Treasuries narrowed to 31 basis points, while the 2-year/30-year spread contracted to 71 basis points. That shift suggests short-end rates are still being pushed by expectations for further tightening, while the upside in long-end yields may be more limited. In pricing terms, the market may be reflecting both a higher-rate environment and the risk of slower future economic growth. BlockBeats also noted that rising energy and housing costs could squeeze household discretionary spending, a key issue given that personal consumption accounts for about 70% of the U.S. economy. Even with the S&P 500 up more than 10% this year, a 5% risk-free rate is narrowing the valuation cushion for equities and other risk assets.

According to BlockBeats, the U.S. 10-year Treasury yield touched the key 5% level on Monday, reaching that mark again for the first time since 2023.

The report said selling in the Treasury market has intensified as pressure persists from the Iran conflict, elevated oil prices, and the U.S. fiscal deficit. Long-term financing costs have risen sharply, and the 30-year fixed mortgage rate has moved back above 7%. Higher rates are now feeding through to the broader U.S. economy.

Energy and housing costs are rising together

International oil prices have climbed back above $100 a barrel, while the average U.S. diesel price has moved past $6 a gallon. With energy and housing costs rising at the same time, household discretionary spending could face more pressure. Personal consumption accounts for about 70% of the U.S. economy, so weaker household spending could also affect growth later on.

Markets are watching the yield curve more closely than the headline level

BlockBeats said the market is paying closer attention to the rapid flattening of the yield curve than to the 10-year yield’s absolute move to 5%. Last week, the spread between 2-year and 10-year Treasuries narrowed to 31 basis points, and the gap between 2-year and 30-year Treasuries tightened to 71 basis points.

That shift suggests short-end rates are still being pushed by expectations for additional rate hikes, while long-end yields may have less room to move higher. In other words, the market may be pricing in both "higher rates" and the risk of slower economic growth ahead.

Valuation room for risk assets is getting tighter

At the same time, the report said tariff, energy, defense, and fiscal policies under the Trump administration continue to push up inflation and deficit expectations. The investment boom tied to AI infrastructure is also adding to capital demand across the economy.

Although the S&P 500 remains up more than 10% this year, a 5% risk-free rate is narrowing the margin for valuation error in equities and other risk assets. Whether the bond market and the broader economy can absorb higher financing costs is shaping up as the next key question for markets.

This article was originally published by Bit.Fan. For more cryptocurrency news and market insights, visit www.bit.fan.

7300

Disclaimer:

The market information, project data, and third-party content displayed on this platform are for industry information sharing only and do not constitute any form of investment advice or return commitment.

Cryptocurrency trading carries high risks. Users should fully assess their risk tolerance and make independent decisions. All profits, losses, and legal responsibilities are borne by the users themselves.