© Reuters.
The yield rose above 5.0% on Monday, reaching a level not seen before in July 2007.
The rise in bond yields is the result of investor expectations of robust U.S. economic growth and concerns about fiscal challenges.
The surge in yields at the long end of the yield curve followed comments from Federal Reserve Chairman Jerome Powell, who suggested that the strong U.S. economy and tight labor market may make tighter financial conditions necessary.
“The yield curve continued its downward steepening, driven by stronger-than-expected macro data and elevated supply. The supply/demand dynamic, with elevated supply and declining demand, will remain the primary driver of Longer-dated Treasuries,” JPMorgan analysts said.
The yield reached 5.021% on Monday, pushing the . The index was trading at 4200 at 06:20 EDT (11:20 GMT).
“The global risk tone continues with the ongoing conflict in the Middle East,” the analysts added.
The S&P 500 is now testing key short-term support, which lies in the 4180-4200 zone.
Elsewhere, the US dollar remained strong, holding its position around the 150 level against the Japanese yen. It is believed that the Bank of Japan may intervene by purchasing yen on the open market to prevent a further decline beyond this point.