10-year Treasury yield climbs to 5.31% as euro slides and Brazilian assets rally
Longer-dated Treasury yields reach multi-decade highs as hawkish Fed comments, European fiscal strain and Brazilian political developments move markets
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Chart: US10Y, US 10-year Treasury yield, one-minute prices, three sessions
The 10-year Treasury yield rose 4 basis points to 5.31%, with longer-dated yields climbing to multi-decade highs. The move extends a selloff that had pushed the 10-year above 5.2% before a pullback last Thursday, when the yield fell to 5.24% and the two-year yield dropped to 4.79%.
Fed tone has turned more hawkish. Chicago Fed President Goolsbee said inflation is going the wrong way, and later warned that stalled services inflation could be spreading. White House adviser Hassett has said current interest payments are too high and called on Jerome Powell to leave the Fed board, after a review found management failures but no crime in the $2.4bn headquarters renovation, days after the Justice Department said it would not pursue a criminal probe.
The euro fell 0.3% to $1.1219 amid European political and fiscal concerns. France's fiscal troubles have been adding to haven demand, and Berlin and Paris have proposed a trade tool to curb China's access to the EU market, after China warned it would retaliate against EU trade measures.
Brazilian assets rallied as Flávio Bolsonaro emerged, extending a rise in the real that followed Bolsonaro's strength in the first round of the runoff. Rising long-dated Treasury yields reflect broader fiscal and term-premium pressure rather than a single catalyst, and that backdrop raises the discount rate applied to US equities generally. The euro's slide fits a pattern of European political and fiscal strain already running through methane, diesel and trade disputes with the US and China. Brazil's rally continues a trend of political clarity supporting its markets even as the broader rate backdrop tightens financial conditions elsewhere.