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10-year Treasury yield hits 1.9% as investors bet on rate hikes

The 10-year U.S. Treasury yield hit 1.9% on Wednesday morning, its highest point since December 2019.

The yield on the benchmark 10-year Treasury note moved 2 basis points higher to 1.8916% at 4 a.m. ET. The yield on the 30-year Treasury bond climbed 1 basis point to 2.2036%. Yields move inversely to prices and 1 basis point is equal to 0.01%.

Treasurys

The 10-year rate surged on Tuesday, topping 1.87%, amid growing investor anticipation that the Federal Reserve could soon start to hike interest rates.

The two-year Treasury yield, which reflects short-term interest rate expectations, also topped 1% for the first time in two years. It remained higher on Wednesday morning, hovering above 1.06%.

In a note on Tuesday, BlackRock Investment Institute’s team of strategists, headed up by Jean Boivin, argued that the anticipated timing of rate hikes wasn’t causing the jump in yields.

“The sum total of expected rate hikes remains low, thanks to a historically muted Fed response to inflation,” the strategists explained.

In fact, they said that the spike in the 10-year yield “tells us that investors are less willing to pay a safety premium for bonds and isn’t bad news for stocks per se.”

In addition, the German 10-year bund yield traded in positive territory for the first time in nearly three years on Wednesday morning.

The European Central Bank is currently behind on its normalization path, compared to the Fed and the Bank of England, but surging inflation and wider moves in the global bond market have now helped to push yields above zero.

On the U.S. data front, the number of house building projects started, and permits authorized, in December are due to be released at 8:30 a.m. ET on Wednesday.

Auctions are scheduled to be held on Wednesday for $40 billion of 119-day bills and $20 billion of 20-year bonds.

CNBC’s Matt Clinch contributed to this market report.

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