10-Year Treasury Yields Rise
Amidst the sought-over September Fed Meeting, investors seemed quite jittery as they sold and sold government bonds, making the 10-year Treasury Yields hit decade highs at 3.49%.
For new investors, it would be important to understand what the 10-year Treasury Yield means. First, there are Treasury bonds, which are a bill that the government borrows to raise capital. The Treasury yield is the interest rate the government pays to those who buy these bonds. In today’s economy, external factors such as inflation can erode the returns on a bond, which may explain why investors today sold them. A higher yield typically means a higher compensation for buying bonds, especially when inflation is very high.
Treasury yields can be affected by not only inflation, but by other factors like interest rates, economic growth, and more. So why do people care that these 10-year treasury yields reached decade highs? Well, they are often used as indicators for investor confidence and sentiment. High yields may mean that investors are pessimistic about the long-term economic prospects.
The near future of the 10-year treasury yield and more importantly, investor confidence, will rely on the Fed’s decision of a 75 or 100 basis point hike in inflation rates, which currently have predictions of 80% and 20% respectively.
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.