The yield on the benchmark 10-year Treasury note started the week on a tear, jumping to 2.99 percent and toying with the key 3 percent level that could trigger a reaction across global financial markets.
The 10-year yield was at 2.979 percent at 7:05 a.m. ET, after topping 2.99 percent earlier Monday. The yield on the 30-year Treasury bond was higher at 3.167 percent. Yields move inversely to bond prices.
Should the yield hit 3 percent, it would be the note’s highest rate since January 2014. The benchmark for mortgage rates and other financial instruments has jumped in April on signs of increasing inflation and as the Federal Reserve signaled more rate increases are to come this year.
Earlier in April, the Fed released the minutes from its March meeting stating that “all participants” expected a strengthening economy and rising inflation in coming months. Also this month, prices for everything from oil to wheat have jumped, sparking concerns inflation may be running hotter than investors would like.
The Fed’s next meeting is May 2.
Investors will get an idea as to whether rates are moving higher for the right reasons when the first reading of first-quarter GDP is released on Friday. First quarter economic activity increased by 2 percent, according to CNBC’s Rapid Update. Investors are concerned inflation is rising, but without an accompanying increase in the pace of economic growth.
On Friday, the yield on the 10-year Treasury note hit 2.96 percent, its highest level since January 2014, while the two-year yield hit its highest level since September 2008.
The approach to 3 percent could weigh on global stock markets. When the yield climbed above 2.9 percent in February, concerns about rising borrowing costs helped trigger a correction for the S&P 500.
Still, some investors may welcome the move, coming as the Fed unwinds its giant balance sheet built up during the financial crisis.
In economic data Monday, a flash reading of the latest composite purchasing managers’ index (PMI) will be published 9:45 a.m. ET, while existing home sales will follow shortly after, at 10 a.m. ET.