US 10-year Treasury yield touches 5% for the first time since 2023 as mortgage rates reach 6.76%

The US 10-year Treasury yield reached the 5% mark intraday on 14 September and closed at 4.97%, with the Federal Reserve deciding on rates the next day.

The US 10-year Treasury yield reached the 5% mark during trading on Monday 14 September, the first time it had done so since October 2023. It did not stay there. The Treasury's own daily par yield curve, the official series, put the 10-year at 4.97% for 14 September, up from 4.78% on 4 September. The distinction matters, because an intraday touch and a closing level are different facts, and several outlets reported the move as a clean break of 5% while the official close was three basis points below it.

The Federal Reserve's policy meeting runs 15 to 16 September and carries a Summary of Economic Projections, so the decision lands the day after the yield move. Press reports put market pricing for a rate rise at close to 90% following the August inflation data, and cite Brent crude climbing to $108 a barrel, heavy government and corporate debt issuance including AI infrastructure, and an unwinding yen carry trade as the drivers.

The front end moved more than the long end

The shape of the move is more informative than the headline. Between 4 and 14 September, on the Treasury's official series, the 2-year yield rose from 4.37% to 4.65%, the 10-year from 4.78% to 4.97% and the 30-year from 5.24% to 5.34%. That is 28 basis points on the 2-year, 19 on the 10-year and 10 on the 30-year.

The repricing is therefore concentrated at the short end, which is the part of the curve the Fed actually controls, and it thins out as maturities lengthen. That pattern is consistent with a market pricing in tighter policy rather than demanding a higher long-run term premium. It is the opposite of what a pure fiscal-supply story would look like, and it is worth keeping in view when the 10-year gets described as the whole picture.

For a mortgage borrower the 5% line was crossed weeks ago

Here is the part that matters to housing rather than to bond desks. A 30-year US mortgage is priced off the long end of the government curve, and the 30-year Treasury has been above 5% every single day this month — 5.27% on 1 September, 5.24% on 4 September, 5.37% on 10 September, 5.34% on 14 September. Monday's headline was about the 10-year crossing a round number that the closer maturity match had already left behind.

Freddie Mac's Primary Mortgage Market Survey, released on 10 September, put the 30-year fixed-rate mortgage at 6.76%, up from 6.71% the week before and 6.35% a year earlier. The 15-year averaged 6.09%, against 5.50% a year ago. On 10 September the 10-year par yield was 4.95%, so the mortgage was carrying a spread of 181 basis points over it.

Two things follow. The 10 September survey predates the move to 4.97% and Monday's intraday 5% touch, so it does not yet contain them; the next print is due on 17 September. And the year-on-year comparison is the one a buyer feels: 41 basis points more expensive than a year ago, on a loan that is usually the largest liability a household will hold.

What a 4.97% risk-free rate does to a 6.00% net yield

Glopra's data for the United States, from our 4 September snapshot and carrying our highest confidence grade, puts the national average at about US$2,433 per square metre with a 6.71% gross rental yield. After the 10.66% effective tax we model on rental income for a standardised non-resident case, that is 6.00% net. Round-trip transaction costs are 6.9%, prices are up 2.2% year on year in both local currency and US dollars, our Bubble Risk score of 57 sits in the moderate band and the price-to-income ratio is 3.5. Miami, our US city row, shows US$5,802 per square metre and a 6.84% gross yield, with a Bubble Risk score of 75 in the elevated band.

Put the numbers next to each other and the arithmetic is plain. A 6.00% net rental yield sits below the 6.76% cost of a 30-year mortgage, a gap of 76 basis points, and it sits a little over one percentage point above a government bond yielding 4.97% with no tenant, no vacancy and no maintenance. That is the compression a higher risk-free rate produces: not a collapse in property values, but a narrower reward for taking property risk, and a negative carry for anyone financing a national-average asset at the survey rate.

Three caveats belong with that. National averages hide enormous dispersion, and a 3.5 price-to-income ratio is low precisely because it is a national figure that includes markets no international buyer is looking at. An intraday touch of 5% is not a close, and one week of curve movement is not a trend. And the Fed sets the short end while the market sets the 10-year, so tomorrow's decision will not mechanically move the number this article is about. None of the above is investment advice, and the arithmetic changes with leverage, location and tax position.

Sources: US Treasury https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value_month=202609; Freddie Mac https://www.freddiemac.com/pmms; Yahoo Finance https://finance.yahoo.com/markets/article/10-year-treasury-yield-climbs-to-5-for-the-first-time-since-2023-123457398.html

Market data: United States · Miami