U.S. Bond Yields Climb, Hitting A 5-Year High
U.S. bond yields hit a five-year high, with the yield on the benchmark 10-year Treasury note rising to nearly 5.25%, driving up the cost of everything from $150,000 home mortgages to $20 billion leveraged buyouts and threatening to slow the nation's economic growth.</br></br>Investors continued to dump Treasurys yesterday -- as they have for more than a week -- amid worries about rising inflation abroad and concerns that foreigners might curb their purchases of U.S. bonds, which have been an important source of support for the market.</br></br>By increasing borrowing costs for American consumers and corporations alike, the upsurge in yields could damp the economy, which barely grew in the first quarter, and intensify the slump in the nation's housing market.</br></br>Rising interest rates raise the monthly payments of homeowners with adjustable-rate mortgages and make it more costly for them to refinance to a fixed rate. They could also put the brakes on the corporate buyout boom, which has been financed by cheap debt and has helped to drive the stock market higher in recent years.</br></br>Yesterday, the 10-year note closed at 5.249%, just above last year's peak rate and slightly below the recent high set in May 2002 of 5.259%. The note's price, which moves in the opposite direction of the yield, was 94 8/32, down 27/32, or $8.4375 for each $1,000 invested. The price of the 30-year bond was 91 1/32, down 1 20/32, pushing its yield up to 5.356%, the highest since June 2004.