US 10-year Treasury yield hits 5.06%, its highest since 2007, as investors start worrying about 6%

The benchmark US 10-year Treasury yield breached 5% on Wednesday, reaching 5.058% — its highest point in nearly 20 years, since 2007, Barron’s reported. The 5% mark is regarded as critical for investors because yields at this level weigh on earnings, particularly for growth stocks.

US equities fell as yields rose. The Nasdaq Composite dropped 1.2% and the S&P 500 fell 0.6%, while the Dow Jones Industrial Average slipped 0.2%, or 116 points, according to Barron’s.

Oil prices added to the pressure. Brent crude futures surpassed $101 a barrel while West Texas Intermediate futures neared $92 a barrel, and the flash S&P Global US PMI composite output index recorded its fastest expansion since 2021, with the report attributing rising input costs to the energy price spike driven by the ongoing war in Iran, Barron’s reported.

The breach of 5% — a level reached only briefly in recent decades — is prompting investors to ask whether 6% is the level that should be keeping them awake at night, Reuters reported. JPMorgan analysts say the market’s “breaking threshold” may now be “meaningfully higher, potentially in the 5.5%-6.0% range”.

Investor’s Business Daily reported that markets are now betting on two more Federal Reserve rate hikes in 2026, and that Treasury Secretary Bessent is not trying to fight the move: the Treasury kept a $6 billion ceiling on buybacks of long-term Treasury bonds.

Federal Reserve policymaker Austan Goolsbee said this week that he did not know whether markets would react differently to a lengthier period of 5% yields than in the past, while Invesco’s Paul Jackson said that at above 5%, investors can lock in the highest returns on US bonds since 2007 — and that he was already switching some money out of stocks into government bonds, Reuters reported.