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10-Year Treasury Yield Tops 5% Amid Global Shifts

By Markets Desk · 2026-09-20 · 1 min read
A stack of gold bars and a pile of paper currency on a wooden desk
Illustration: Tradingbird

The 10-year U.S. Treasury yield exceeded 5% this week, marking its highest level since 2007. Global investors are increasingly diversifying away from dollar assets due to fiscal concerns and geopolitical risks.

The 10-year U.S. Treasury yield surpassed 5% this week. This marks the highest level recorded since 2007. Investors demand higher returns to compensate for rising debt risks. The national debt burden has reached $40 trillion. Foreign central banks are reducing their holdings of U.S. assets. They are seeking alternatives to dollar-denominated instruments.

Treasury Secretary Scott Bessent stated that U.S. bond auctions remain successful. He asserted that the dollar maintains its role in global transactions. Private capital continues to flow into American financial markets. However, sovereign wealth funds are adjusting their portfolios. Norway’s fund announced plans to lower its Treasury holdings. These moves reflect a broader trend of diversification.

Sovereign Funds Reduce Treasury Holdings

Norway’s sovereign wealth fund plans to cut its U.S. Treasury exposure. This is the world’s largest sovereign fund. It seeks stronger returns in other markets. Central banks report a steady decline in dollar reserves. The share of dollar holdings in global reserves fell to 56% by late 2025. This is down from 64% in 2015. The trend persists despite strong U.S. economic performance.

Sanctions Drive Currency Diversification

Eswar Prasad of the IMF noted that sanctions impact investor behavior. He said official investors are moving away from dollar assets. The U.S. uses financial tools to enforce foreign policy goals. This practice has raised concerns among allied and non-aligned nations. Countries are exploring mechanisms to bypass the dollar system. The weaponization of currency is a key driver of this shift.

Federal Reserve Faces Inflation Pressure

The Federal Reserve is expected to raise interest rates on Wednesday. This move aims to control elevated inflation. Higher rates typically increase the cost of borrowing. They can slow economic activity. Bond markets reacted with increased volatility. Investors are reassessing the risk profile of U.S. debt. The policy decision could stabilize yields in the near term.

Based on reporting by Inquirer.com, compiled by the Tradingbird desk.

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