PIMCO Warns US 10-Year Treasury Yield Could Reach 6 Percent for the First Time in 26 Years

Dan Ivascyn, chief investment officer of PIMCO, told the Financial Times that the US 10-year Treasury yield could reach 6 percent for the first time in 26 years and that another sharp rise in borrowing costs is "not out of the question". According to Donya-e-Eqtesad (18 Mehr 1405, October 10, 2026), citing the paper, after weeks of heavy selling in the $32 trillion Treasury market, hedge funds and other leveraged investors have been forced to close losing positions. Ivascyn warned that if the 10-year yield reaches 5.5 percent or more, risk markets in equities and credit would see notable falls. This is an assessment and a warning, not a firm forecast.

The numbers: Trading Economics logged the 10-year yield at about 5.24 to 5.26 percent on Friday, 17 Mehr (October 9); on Thursday it closed 6 basis points below its highest level since 2002. Markets priced roughly 81 percent odds that the Federal Reserve holds rates at this month's meeting and about 69 percent odds of a 25 basis point hike in December. Per Donya-e-Eqtesad, the average 30-year fixed US mortgage rate stood at 7.4 percent as of 16 Mehr (October 8), and borrowing costs for the lowest-rated companies reached 17 percent in October, the highest since May 2020. Demand at the 10-year and 30-year auctions in the week to October 9 was strong. Higher US yields feed into domestic currency and coin prices through the dollar and global gold.