Ten-Year Yield Climbs to Highest Since 2007 Before Fed Decision

The benchmark 10-year Treasury yield rose about 8 basis points to 5.041% on Tuesday, its highest level since 2007, as a selloff in U.S. government debt deepened one day ahead of the Federal Reserve's interest-rate decision. The yield had briefly crossed 5% on Monday before slipping back, marking the first move above that threshold since 2023.

Money markets now price roughly a 93% chance of a 25-basis-point hike when the Fed announces on September 16, up from the low-80s range earlier in the week. Equities have been sensitive to the move: the S&P 500 slipped 0.5% and the Nasdaq 100 fell 0.8% in the prior session, with rate-sensitive sectors among the weakest performers.

Higher long-term yields raise borrowing costs across the economy and reset the discount rate applied to future earnings. Banks such as Bank of America can see wider net interest margins from higher short rates, while rate-sensitive income names including Realty Income, Agree Realty and Medical Properties Trust typically face pressure when long yields climb. Whether the move proves durable may depend on the tone of Wednesday's statement and the accompanying projections.