Saturday, October 17, 2026
Citigroup's head of US rates strategy told clients on Friday that Treasury Secretary Scott Bessent is likely to reduce long-dated auction sizes and replace the money with Treasury bills, a change that would be announced on 4 November. The bank says the 20-year bond could be cancelled outright.
The 30-year Treasury yield closed at 5.49 per cent on Friday, its highest since the Treasury resumed issuing the bond in February 2006, and the ten-year ended the week 21 basis points higher than it started. The University of Michigan's final September survey has year-ahead inflation expectations at 4.6 per cent, up from 4.0 per cent in August, and sentiment at 48.1.
On Monday the S&P 500 rose 1.5 percent, the Nasdaq closed at a record, crude fell more than 4 percent and the ten-year yield slipped. The two-year Treasury yield, the maturity most tied to the Fed, closed at 4.76 percent, exactly where it was on Friday and its highest close since July 2024.
The ten-year Treasury settled at 5 percent on Tuesday, its highest since 2007. On Wednesday it fell, equity futures rose across the board, Brent gave up about 5 percent and gold dropped $35. A rate rise is supposed to make risk more expensive. This one was received as insurance against something worse.
The funds rate has sat at 3.5 to 3.75 percent while the 30-year Treasury reached 5.31 percent last month, its highest in 19 years, and the 10-year went to levels last seen in 2023. A governor says he is inclined to hold. The long end is not arguing with him. It has stopped listening.
The ten-year Treasury reached its highest yield since November 2023 on Wednesday. On the same day Japanese ten-year debt passed 3 percent for the first time in thirty years, German yields hit a fourteen-year high and British yields an eighteen-year one. Four governments with four different problems do not usually move together.