Bond Yields Surge to 5% for the First Time in Over a Decade

The yield on 10-year U.S. Treasury debt has reached its highest level in 16 years, with bond yields and other interest rates rising as well. This is due to expectations of high future interest rates, as the Federal Reserve has been signaling for months. Bond investors have started believing that interest rates will not fall in the future, thanks to a resilient economy and growing concerns about the deficit. However, historically speaking, current yields are not that high, as they are close to the long-term average. The artificially low rates maintained by the Federal Reserve in recent years may be coming to an end.