U.S. 10-Year Treasury Yield Breaches 5.3% During Session, Hits Highest Level in 24 Years

[Financial News] The U.S. 10-year Treasury yield breached 5.3% on the 30th of last month (local time), reaching its highest level in 24 years.
According to Tradeweb, the U.S. 10-year Treasury yield rose as high as 5.304% at one point during the session, surpassing the intraday high of 5.303% recorded in 2007. This was its highest level since May 2002.
The sharp upward revision to U.S. second-quarter economic growth reaffirmed the resilience of the U.S. economy and added pressure on long-term interest rates.
The United States Department of Commerce finalized second-quarter GDP growth at 2.2%, annualized from the previous quarter.
The figure was revised up by 0.7 percentage points from the previous estimate of 1.5%. Markets had expected the previous figure to remain unchanged.
The growth rate of personal consumption, which accounts for more than two-thirds of the U.S. economy, was also revised up from 3.4% to 3.8%. Corporate investment related to building AI infrastructure supported the growth.
Meanwhile, the Personal Consumption Expenditures (PCE) price index released the same day rose 3.4% from a year earlier in August, below the market expectation of 3.7%.
The core PCE price index, which excludes volatile food and energy prices, also rose 3.0%, below market expectations. Although the lower-than-expected inflation reading somewhat weakened expectations that the Federal Reserve System (Fed) would deliver another rate hike in October, stronger-than-expected growth raised concerns that high interest rates could persist for an extended period. It showed that the U.S. economy was holding up well despite the current elevated rate levels.
Long-term Treasury yields are being driven not only by the Fed's monetary policy but also by structural factors such as the U.S. government's fiscal deficit, increased Treasury issuance and large-scale private-sector investment in AI infrastructure.
The Wall Street Journal (WSJ) noted that even if oil prices fall sharply going forward, rising government debt worldwide and record-scale investment in AI infrastructure could keep bond yields at elevated levels.
[email protected] Lee Seok-woo, international affairs specialist Reporter