US yields at 2007 levels crimp stocks, while yen sirens blare

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LONDON, Sept 26 - U.S. Treasury yields hit a peak not seen since the early tremors of the 2007-2008 global financial crisis on Tuesday, as fears of interest rates staying high for longer roiled risk assets globally and drove the dollar to a 10-month high.

The yield on 10-year Treasury notes rose as high as 4.566%, a 16-year peak, while a hefty pipeline of U.S. treasury auctions this week and fears of a U.S. government shutdown all further stoked the skittish mood. The gap between the yields on Italian benchmark 10-year BTP bonds and safer German Bunds has risen to around 1.86 percentage points , the widest since late May, as Prime Minister Giorgia Meloni prepares a difficult 2024 budget.

Hundreds of thousands of federal workers could be furloughed and public services suspended if Congress is unable to fund the new fiscal year starting Oct. 1. The European Central Bank and Bank of England have also touted higher rates for longer in policy meetings since the middle of the month. The dollar held near an 11-month peak of 148.97 yen from overnight, with 150 per dollar seen by financial markets as a red line that would spur Japanese authorities to act, as they did last year.

 

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