Traders work on the floor of the New York Stock Exchange (NYSE) on September 9, 2026 in New York City. Spencer Platt | Getty Images The benchmark 10-year Treasury yield rose to its highest level since 2007 on Tuesday as the sell-off of US government debt deepened ahead of the Federal Reserve’s interest rate decision. The 10-year yield jumped more than 6 basis points to 5.025% at 1:10 a.m. ET. On Monday, the 10-year yield had briefly crossed 5%, before falling a bit. One basis point is equal to 0.01 percentage point, and yields and prices move in opposite directions. The 2-year Treasury yield rose about 4 basis points to 4.68%. The move comes ahead of the Federal Reserve’s two-day policy meeting starting Tuesday, in which markets are pricing in increased chances of a quarter-point rate hike after August inflation remained well above the central bank’s 2% target. Traders are pricing in a more than 92% chance that the Federal Reserve will raise rates by 25 basis points at its latest meeting, according to the CME FedWatch tool. “10-year Treasuries are very sensitive to inflation expectations, and with inflation indicators still above the Federal Reserve’s target of 2%, we think this close correlation is likely to persist for a while,” said Jonathan Liang, CIO of fixed income and currencies at Standard Chartered. The yield on the 10-year Treasury has risen to 0.96, according to BMO Capital Markets. “Simplistically speaking, higher oil prices lead to inflation expectations higher and vice versa,” said Steve Sosnick, chief strategist at Interactive Brokers. “Typically, the relationship is not as clear-cut as it is now, but the geopolitical drivers behind the price of oil and global inflation are so prominent that the normally modest correlation has become much tighter,” he told CNBC by email. “As long as oil prices remain firm and continue to rise, this will add pressure to interest rates,” he added.
