US 10-Year Treasury Yield Surges, Tops 1.7%

In a sign that the cost of borrowing on everything from homes to cars is expected to move higher in the coming months, the yield on the 10-year treasury climbed to 1.738 percent in trading on Thursday.

This is the first time the yield traded higher than 1.7% in more than a year.

Most loans (including car loans, credit card loans, mortgage loans and major commercial loans) are calculated based off the yield on the 10-year treasury. So, a higher rate on the U.S. treasury note typically signals higher borrowing costs throughout the rest of the economy.

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On Wednesday, Federal Reserve bankers increased their projections for growth and inflation yet promised to continue their low interest rates and bond-buying programs through all of 2021, 2022 and 2023. With accommodative monetary policy in place, as well $1.9 trillion in stimulus about to take effect, the expectation is that there will be some inflationary pressures.

Already, in February, food and energy prices went up. Grocery store prices increased 3.5% and restaurant prices jumped 3.7%.

With rates not rising until possibly 2024, there may be additional rate hikes for treasuries in the coming years.

Higher rates on Treasuries signal higher rates in the rest of the economy since mortgage rates and other loans (auto and credit card, for example) are all based off the 10-year treasury note.

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