Treasury yields are at their highest since 2002, and buyers are present: if not inflation, what is driving the rise?

The ten-year U.S. Treasury yield closed at 5.31%, its highest since May 2002, while the S&P 500 reached a record high. We decomposed the rise using Treasury data and the New York Fed's model, and examined the 7 October auction results and futures positions in EL7's database. We found that expected inflation barely moved, and that the entire rise since the rate hike came from the term premium.

5.31%

Ten-year Treasury yield on 5 October, the highest close since May 2002

2.36%

Ten-year inflation compensation, up from 2.25% at the start of the year

+28.0

Basis points added by the term premium since the 16 September decision

2.5%

Primary dealers' share of the 7 October auction, the lowest since 2008

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EL7 Research · Bonds and Interest Rates

8 October 2026 · Yields and prices through the close on 7 October