10-year yield notches new 3-year high after surge this week on Fed's tightening plan

The 10-year rate hit a fresh 3-year high on Friday as investors continued to digest minutes from the previous Fed meeting.

The yield on the benchmark 10-year Treasury note traded above 2.7% on Friday, near its highest level since March 2019 as it continues its jump following recent comments from the Fed. The 2-year rose about 5 basis points to 2.516%.

The yield on the 30-year Treasury bond advanced about 6 basis points to 2.746%, while the 5-year rate climbed 6 basis points to about 2.75%. Yields move inversely to prices and 1 basis point is equal to 0.01%.


"The steeper curve is reacting obviously to the Fed, to inflation," said John Lynch, chief investment officer at Comerica Wealth Management. "I think when you see rates going up it's more of a value play for cyclical recovery, an alternative to expensive growth stocks. I think it's investors doing their homework and looking at the fundamentals."

The 10-year rally comes after Fed minutes published Wednesday indicated that the central bank plans shrink its balance sheet by $95 billion a month. Fed officials also suggested there could be one or more 50-basis-point interest rate hikes on the cards.

This more aggressive tightening of monetary policy, along with rising inflation, has seen yields invert. Investors have been selling out of shorter-dated Treasury in favor of long-dated government debt, indicating concerns about the near-term health of the economy, with fears of a recession on the rise.

Investors also continue to monitor developments in Ukraine as U.S. Congress voted to revoke Russia's trade status, banning oil and gas imports. That followed reports of rape and torture against civilians by Vladimir Putin's forces, which drew strong condemnation from G-7 members, who voted to remove Russia from the U.N. Human Rights Council. staff contributed to this market report.