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Treasury selloff points to higher real rates rather than inflation panic

The 10-year Treasury yield hit a level not seen since 2007 on Sept. 23, and the five-year yield moved above 5% for the first time in nearly two decades, according to ConnectCRE.

Reported · Written up by our desk · Industry

ConnectCRE said the sharp selloff in the Treasury market in September is better explained by a repricing of real rates and policy expectations, rather than a broad loss of confidence that inflation will be contained over the long run.

The outlet noted that the 10-year Treasury yield reached 5.xx% on Sept. 23, its highest level since 2007, while the five-year yield rose above 5% for the first time in nearly two decades.

ConnectCRE also pointed to inflation expectations, saying 10-year inflation breakeven rates were near 2.35% and little changed from early September.

The outlet said the remaining risk is skewed toward higher long-end yields and continued cross-asset volatility.

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