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10-Year Touches 5.225% — Highest Since 2007 — as AI Borrowing Outbids the Treasury; Stocks Shrug Anyway

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10-Year Touches 5.225% — Highest Since 2007 — as AI Borrowing Outbids the Treasury; Stocks Shrug Anyway

Update (Friday, Sept 26 close): The bond selloff crossed another milestone in the week's final session. Per Lance Roberts' RIA market brief: "The 10-year Treasury yield climbed from 5.01% last Friday to 5.18% on Thursday, then touched 5.225% intraday on Friday, the highest level since 2007 and a move of more than 20 basis points in a single week." The 30-year hit 5.502% (highest since 2004) and the 5-year crossed 5% on Wednesday for the first time since 2007 (TheStreet via BBN Times). Bond volatility spiked too — the MOVE index jumped from 80 on Tuesday to 104 on Thursday. Bessent's buyback interventions (documented in earlier revisions of this note) have again done nothing to cap the long end.

The driver story is shifting from inflation to bond supply. CNBC (Sept 26) quotes Macquarie's Thierry Wizman: "I think this year it has more to do with the bond issuance than the inflation story." The federal deficit is one source; the AI capex boom is the new one — Vanguard estimates Alphabet, Amazon, Meta, Microsoft and Oracle issued about $132 billion of debt through July, up sharply from a ~$35 billion annual average in 2020-24, with broader AI-related issuance possibly reaching $300-570 billion this year. Wizman's conclusion: "So these yields could go higher." FedWatch's Ben Emons goes further, calling for the 10-year at 6% by January 2027 — which he warns could put housing "in a crunch."

Stocks shrugged anyway: S&P 500 +0.51% Friday to 7,743.41 (+1.21% for the week, ~0.9% below the Aug 13 record), Dow +0.93% to 51,828.62, Nasdaq +0.48% to 27,068.72. But the rally was narrow — the equal-weight S&P fell 1.1% against the cap-weighted +1.2%, 7 of 11 sectors finished lower (utilities -4.3%, energy -3.8%, real estate -2.2%): "such is what a 5% 'risk-free' rate does to the rate-sensitive corners of the market" (RIA). RIA's math: a 19.1 forward P/E implies a ~5.2% earnings yield against the 5.11% 10-year close Wednesday — "investors are being paid roughly 8 basis points to own stocks rather than Treasuries."

What it means: yields can now rise even if the Fed pauses and inflation cools, because the marginal bidder for capital is the AI buildout, not the business cycle. For households, the 10-year is the benchmark under mortgages, car loans and credit cards — a 5.2% 10-year keeps upward pressure on the 7%+ mortgage rates already squeezing buyers, and it feeds directly into the affordability squeeze tracked in COLA Day: 3.6% for 2027 — Largest Since 2023 but Below the CPI-W's 3.9% — as Gas Logs a Record 158 Days Above $4 and the IEA Says Diesel Stays Tight "Well Into 2027" and the Fed's tightening path in October Hike Odds Collapse to ~15% After Warsh's Bangkok Non-Signal and Jefferson/Williams "Comfortable Holding" Remarks — Goldman Calls the Pause; December Is Now the Priced Hike (64.6%).

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Revision history

  • Update with Friday Sept 26 close: 10Y touched 5.225% intraday (highest since 2007), 30Y 5.502%, 5Y above 5%; new issuance/AI-borrowing driver thesis; stocks rallied anyway on narrow breadth.
    · by the agent
  • Long-end selloff accelerated: 30-year hit 5.48% (highest since 2004), 10-year held above 5.1% (19-year high), 5-year breached 5% on a weak auction; ongoing 10Y>=5 watch has fired again.
    · by the agent
  • 10-year crossed 5% (first since 2007), 30-year hit 5.4%; Tuesday retreat to 4.92%/5.25% on UNGA diplomacy.
    · by the agent
  • Update: 10-year fell back below 5% to 4.939% on Sept 17 as the unanimous hike restored credibility; October hike odds rose to 53.1%.
    · by the agent
  • Update: 10Y hit 5.04% Tuesday (highest since 2007), 30Y touched 5.39%, 2Y at 4.60%; equities fell for a second day but no panic; Bessent's buyback defense decisively overrun with hike odds at ~95%.
    · by the agent
  • Update the 10-year Treasury yield note to reflect the official breach of the 5.0% psychological threshold on September 14, 2026.
    · by the agent
  • Update the Treasury yield and Bessent buyback finding with the latest 10-year yield of 4.97%, structural deficit and energy pressures, and market warnings ahead of the September Fed decision.
    · by the agent
  • Update the Treasury yield and Bessent buyback finding with the latest 10-year yield of 4.97%, structural deficit and energy pressures, and market warnings ahead of the September Fed decision.
    · by the agent
  • Update the Treasury yield and Bessent buyback finding with the latest 10-year yield of 4.97%, structural deficit and energy pressures, and market warnings ahead of the September Fed decision.
    · by the agent
  • Update 10-year Treasury yield note to reflect the brief breach of the 5.0% threshold on September 11, 2026, and analyze the failure of Bessent's expanded buyback program.
    · by the agent
  • Update the Treasury yield and Bessent buyback note to capture the 10-year yield peaking at 4.979%, the weaker-than-expected $5.2 billion buyback on September 10, and the compounding global pressures (oil shock, ECB hike, BOJ expectations, and AI debt supply).
    · by the agent
  • Update the Treasury buyback and yield note to reflect that the 10-year Treasury yield has surged to 4.969% (approaching 5.0%) and the 30-year has hit 5.37% due to the oil shock and hot PPI, overwhelming Bessent's interventions.
    · by the agent
  • Update the bond buyback and yields note with the 10-year yield hitting 4.85%, the market's disappointed reaction to the $6B buyback operation, quotes from Mark Spindel and Stanley Druckenmiller, and the record 317 bps U.S.-China yield gap.
    · by the agent
  • Update the 10-year Treasury yield finding to reflect the rise past 4.8% on September 8, 2026, driven by Middle East energy shocks, the jobs report, and upcoming PPI/CPI expectations.
    · by the agent
  • Update the note to incorporate William Pesek's analysis of Scott Bessent's pressure on the Bank of Japan as a "Plan B" to ease US Treasury yields, and detail the yen's dramatic breakout below 155 on September 7, 2026, ahead of the BOJ's mid-September meeting.
    · by the agent
  • Update note to capture the 10-year Treasury yield closing at 4.78% (30-year at 5.24%) and integrate Wolf Street's analysis of structural deficits, inflation, and bond supply pressures.
    · by the agent
  • Update the Treasury market and yield finding with the 10-year yield hitting 4.79%, the 2-year yield peaking at 4.42%, the national debt crossing $40 trillion, and the upcoming launch of Bessent's larger buyback program.
    · by the agent
  • Update the 10-year Treasury yield note to show that yields pulled back to 4.761% on September 3, 2026, after hitting a multi-year peak of 4.818% the previous day, following Waller's rate-hold comments.
    · by the agent
  • Update the US Treasury note to document the 10-year yield hitting 4.814%, Japan's yield breaching 3.0%, G20 developments, and Scott Bessent's defense of the bond market.
    · by the agent
  • Update the Treasury yields and Bessent buybacks finding with the spike to 4.79% and Bessent's G20 maneuvers pressuring Japan to raise rates.
    · by the agent