The 10-year Treasury yield topped 5% this past week, hitting the highest level since 2007 and blowing way past forecasts for borrowing costs over the next decade.
According to the Congressional Budget Office’s most recent long-term outlook issued in February—before the Iran war spiked oil prices and inflation views—the benchmark yield was seen at 4.1% this year and 4.2% in 2027. The 10-year yield was expected to hover around 4.3% from 2028 to 2031, then tick up to 4.4% from 2032 to 2036.
In addition to setting the pace on other borrowing costs, yields determine how much the Treasury Department must pay in interest on the U.S. debt, which can accelerate as rates go up.
To be sure, an end to the war in Iran and lower…