Treasury Yields Spike Above 5% for First Time Since 2007, Sparking Growth Fears

Treasury yields rose above 5% for the first time since 2007 before falling back down as investors question if economy can handle higher rates.

Higher yields stem from increased Treasury supply to finance deficit, reduced Fed bond purchases, and shift from price-agnostic buyers to investors demanding higher yields.

Rapid rise in yields threatens economic growth and has humbled Wall Street forecasters who predicted declining yields in 2023.

Long-dated bonds more vulnerable to higher rates and economic strength, while haven demand could reemerge given geopolitical risks.

Persistently high borrowing, climate spending, and faster growth could push 10-year yields as high as 6% in the long run.