10-year Treasury note yield hits highest level since 2002 as traders brace for key bond sale

U.S. Treasury yields climbed Wednesday, trading back around multiyear highs, as traders braced for the sale of 10-year notes at a time when rising yields have rattled investors around the world.

The benchmark 10-year Treasury was up 7.4 basis points at 5.345%, and the 30-year Treasury bond rose 8.3 basis points to 5.724%. The 2-year Treasury note yield was up 2.7 basis points to 4.818%.

One basis point equals 0.01%, and yields and prices move in opposite directions.

The Treasury plans to sell $39 billion of 10-year notes in an auction on Wednesday that will test whether yields are now attractive enough to draw buyers or investors will demand an even bigger premium, amid concerns about inflation, debt levels and term risk. The auction's results will be released at 1 p.m. ET.

This will be the second of three Treasury Department sales this week. The government sold $58 billion in 3-year notes on Tuesday and is scheduled to sell $22 billion 30-year bonds on Thursday.

"We were encouraged by the takedown of Tuesday's 3-year auction supply – which stopped through slightly but didn't tail as had been the previous streak for coupon auctions," BMO's Head of U.S. Rates Strategy Ian Lyngen said in a note at Tuesday's close.

"It goes without saying that [Wednesday's] 10-year supply is far more relevant for setting the tone in US rates. Notwithstanding the solid reception to the 3-year supply, we'll look for an auction concession of significance ahead of the reopening of 10s – either outright or on the curve," the analysts added.

The sales come bonds overseas sell off as well. The yield on the 10-year French bond surged 12 basis points to trade at 4.876%. The 10-year U.K. Gilt yield jumped 7 basis points to 5.447%.

Treasury also will stage its latest buyback operation on Thursday, when it will be targeting maturities between 20 years and 30 years. The liquidity support operation will be at least $4 billion, or double the normal size. The last buyback in that range came to just over $4 billion.

FOMC meeting minutes, due 2 p.m. ET, will also be parsed for potential insights on Fed monetary policy decision-making. At the Fed's September meeting, policymakers voted to raise interest rates for the first time since 2023.

Bond yields have been selling off over the past six weeks as investors were concerned about inflation and rising energy prices.

Traders are now pricing in a 78% chance that the Fed will keep rates unchanged at its next meeting, according to the CME Group's FedWatch tool.

The New York Fed at 11 a.m. will release its monthly survey of consumer expectations, which will contain the outlook for inflation at the one-, three- and five-year horizons.