Treasury Yields Surge Past 1.6%, Sounding Alarm for Risk Assets

Yields on U.S. government debt blew past another set of closely watched levels, with a key part of the Treasury curve surging past an inflection point that’s seen as potentially squelching global speculative euphoria.

Yields took off with startling speed on Thursday, with the rate on 10-year Treasuries at one point reaching 1.61%, the highest in a year. In a telltale warning sign for some strategists, the 5-year Treasury yield soared convincingly above 0.75%, a crucial level that was expected to exacerbate selling, as traders pulled forward bets on when the Federal Reserve will start lifting policy rates. The 10-year U.S. real yield -- which strips out inflation and is seen as a pure read on growth prospects -- climbed as much as 25 basis points to a level last seen in June.