Executive summary · 1 year to the 2026-10-16 close
Treasuries sold off over the past year with a bear-flattening bias on rising inflation concerns, driven by an oil shock.
Oil's jump from $59 to $102 a barrel pushed headline CPI from 3.0% to 3.7% just as an AI investment boom kept the economy running hot, leaving no room to ease: the Fed reversed course with a 25bp hike in September, and the front end, which trades the Fed, repriced most. The 2-year rose 133bp to 4.74% and the 10-year rose 110bp to 5.09%, its highest since July 2007; nearly all of it came through real yields, so this is a repricing of the Fed's path rather than a loss of faith in long-run inflation control. Futures now price about 3.0 hikes by September 2027; the next tests are the FOMC on October 28.
2Y 4.74% (+133bp, 1Y) · 10Y 5.09% (+110bp, 1Y) · 30Y 5.43% (+85bp, 1Y)