Fed's First Hike Since 2023 Puts the 10-Year at 5.11%

The Federal Reserve's first interest-rate hike since 2023 got its answer this week, and the market's verdict is that higher-for-longer is now the base case. The 10-year Treasury reached 5.11% and the 2-year 4.85% on Wednesday, September 23, the first sustained move above 5% in this cycle, delivered into an economy that refuses to crack under a 4.1% unemployment rate.

Key Takeaways The Fed raised its target range 25 basis points to 3.75%-4.00% on September 16, its first hike since 2023, arguing that “inflation remains elevated.” The 10-year Treasury reached 5.11% and the 2-year 4.85% on September 23, the first sustained 10-year move above 5% in the cycle. The 10y-2y spread at +31 basis points…