US Treasury Yields Hit Highest Since 2002 as Fed Signals Another Hike — Dollar Climbs, Gold Slides
The US 10-year Treasury yield hit 5.365% — its highest level since 2002. The Fed minutes left little doubt: every policymaker backed September’s rate hike, and most want another one before year-end. Markets now price that move at close to 80%. The dollar is hovering near 18-month highs, gold is sliding toward $4,100 and silver is at a two-month low. Here is what it means for currencies and precious metals.
⚡ Key numbers:
- 5.365% — peak US 10-year yield (Oct 7), the highest since 2002; around 5.32% on Thursday.
- 5.71% — the 30-year Treasury yield.
- 78.3% — odds of a December Fed hike (CME FedWatch); current target range: 3.75–4.00%.
- US Dollar Index (DXY) around 102.3 — near its highest levels since April 2025.
- Gold around $4,110 (intraday low $4,066), more than 25% below January’s record near $5,600. Silver below $59 — a two-month low.
Fed: unanimous on the hike, most want another
On Wednesday evening (Oct 7) the Federal Reserve released the minutes of its September 15–16 meeting. The Fed raised rates by 25 basis points to a 3.75–4.00% range in a 12–0 vote. The minutes show that all participants supported the decision and that “most participants assessed that another increase in the target range for the federal funds rate would likely be appropriate by year end”.
The reason is simple: inflation is not backing off. Fed staff estimated August headline PCE inflation at 3.8% year on year and core PCE at 3.4%, and participants saw risks to prices skewed to the upside. Consumers agree: the New York Fed’s one-year inflation expectations rose to 3.9% in September, the highest since May 2023. Several officials also noted that financial conditions remain supportive of growth, with equities sharply higher this year and corporate bond spreads narrow.
No change is expected at the October 27–28 meeting. Futures, however, fully price a 25 bp hike to 4.00–4.25% at the December 9 decision.
Yields at a 24-year high: why it matters
The 10-year Treasury yield is the world’s most important interest rate. It drives US mortgage rates, equity valuations and government borrowing costs worldwide. At 5.365% it has cleared the October 2023 peak (4.99%) and the June 2007 high (5.26%). Only in 2002 was it higher.
The pressure is not limited to the US. The 30-year Treasury yield has climbed about 0.7 percentage points since early May to 5.71%, and the UK 30-year gilt crossed 6% on October 1 for the first time since 1998. The fuel is oil: WTI trades around $89–90, while tensions around the Strait of Hormuz and a hurricane in the Gulf of Mexico add to inflation risk. We covered the G7’s attempt to cool fuel prices in our article on the release of 100 million barrels of emergency oil.
The reaction to the minutes themselves was calm. As Societe Generale put it, the “muted reaction to the FOMC minutes and the solid Treasury auction saw US 10y yields hover in a narrow range overnight”. The market had already priced the hawkish scenario.
Dollar: supported by rates, capped by profit-taking
High yields pull capital into the dollar. The DXY index is hovering around 102.3, near levels last seen in April 2025. ING expects the dollar to grind toward 102.85, underpinned by elevated yields and strong demand at the latest 10-year auction. BBH points to robust foreign demand for US assets and firmer oil, although the dollar gave back some gains on Thursday as traders took profits.
The moves are visible across the majors: USD/JPY is approaching 158.00, while EUR/USD holds around 1.12–1.13. Emerging-market currencies feel the strain too — the Polish zloty included, after Poland’s central bank kept rates unchanged at 3.75% on October 7.
Gold and silver under pressure from yields
Gold pays no interest, so rising real rates work against it. On Wednesday the price fell almost 1.3% to around $4,111 an ounce, with an intraday low of $4,066. Key support is the psychological $4,100 level, then the $3,950–4,000 zone — this year’s lows. Resistance sits at $4,200 and then the 100-day moving average near $4,267. Gold is more than 25% below January’s record close to $5,600.
The fundamental floor is still there, though. According to the World Gold Council, central banks bought 39 tonnes of gold in August and 170 tonnes year to date. The People’s Bank of China has been buying for 22 straight months, and Poland and Uzbekistan each added 8 tonnes. Silver, more sensitive to the economic cycle, has dropped below $59 — its lowest in two months.
What to watch next
- US CPI inflation — another hot print would cement the December hike scenario.
- Fed speakers, including Christopher Waller and Alberto Musalem.
- Oil — every price spike feeds into inflation expectations and yields.
- The 5.365% level on 10-year yields — a sustained break would open the way to the highest levels in more than two decades.
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Frequently asked questions
What is the US 10-year Treasury yield now?
On October 7, 2026 the US 10-year Treasury yield reached 5.365%, its highest level since 2002. On October 8 it stood at around 5.32%.
Will the Fed raise rates in December 2026?
Markets price it at about 78% (CME FedWatch). The September minutes show most Fed officials see another hike by year-end as likely appropriate. No change is expected at the October 27–28 meeting.
Why does gold fall when bond yields rise?
Gold pays no interest. When bonds offer higher returns and the dollar strengthens, the cost of holding gold rises and investment demand weakens, which pushed the price down toward $4,100 an ounce.
How do higher US yields affect the dollar?
Higher yields attract capital into US assets, which supports the dollar. The DXY index is near its highest levels since April 2025, and ING sees it grinding toward 102.85.
Disclaimer: This article is for information purposes only and does not constitute investment advice. Prices as of October 7–8, 2026 may vary by source. Trading leveraged CFDs carries a high risk of losing money.
