US 10-year Treasury yield expected to exceed 5% this year

The US bond market is having a rough year, and it is not done yet. A majority of respondents to Bloomberg’s Markets Pulse survey predict the 10-year Treasury yield will cross above 5% before 2026 ends, a threshold that would mark the most sustained run at that level in nearly two decades.

The 10-year yield sat at approximately 4.70% on August 19, a 19-month high, and the direction of travel has been consistently upward.

What the numbers actually say

The Bloomberg survey polled 101 market participants, and 57% of them expect 30-year Treasury yields to close 2026 at or above 5%.

The 30-year yield already briefly crossed 5% earlier this year during an oil-price spike that rattled long-end bonds. The question now is whether it stays there, and whether the 10-year benchmark follows.

For context, the 10-year yield last touched 5% briefly in October 2023. Before that, you have to go back to 2007 to find a period where it held above that level with any consistency.

A separate Reuters poll from August 2026 showed a median 10-year yield forecast of 4.50% over a three-month horizon. 82% of the strategists surveyed flagged upside risks to that estimate.

Why yields keep climbing

First, inflation has proven stickier than the Federal Reserve’s models preferred. The Fed has held policy rates steady, resisting the rate-cut cycle that bond markets spent much of 2024 and early 2025 pricing in.

Second, the supply of Treasuries is enormous and growing. The US government is running large deficits, which means the Treasury Department keeps issuing new bonds to cover the gap between spending and revenue.

Third, the geopolitical backdrop has introduced a volatility premium into long-dated bonds. Oil-price spikes, trade tensions, and shifting foreign demand for US debt have all contributed to a market that prices in more uncertainty.

What higher yields mean for everything else

When the 10-year yield rises, the cost of mortgages rises, corporate borrowing gets more expensive, and the math on equity valuations shifts. A company whose future earnings are discounted at 5% rather than 3% is simply worth less on paper today.

Companies that locked in cheap debt during the 2020-2021 era of near-zero rates are gradually rolling those obligations over at much higher costs.

Mortgage rates track the 10-year yield closely, and rates above 7% have already suppressed transaction volumes in the residential market.

What bears watching most closely over the coming months is whether foreign demand for US Treasuries holds up. Japan and China have historically been large buyers, and any reduction in their appetite would amplify the supply-demand imbalance already pushing yields higher. The Fed’s own balance-sheet reduction, which removes a buyer that was once absorbing enormous amounts of government debt, compounds the same problem. With 82% of Reuters-surveyed strategists already flagging upside risk to their own forecasts, the market’s base case appears to be that the path of least resistance for yields is still up.

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