The latest surge in long-term interest rates to the highest levels in 16 years adds to a lengthening list of headwinds threatening to blow the US economy off a soft-landing course. 10-year Treasury yields are up over a percentage point since mid-May, reaching 4.56% Tuesday afternoon, the highest since October 2007. The latest leg-up in yields has come after the central bank delivered a more hawkish message than many investors expected last week even as it kept interest rates unchanged.
Meanwhile CD funding maintained what we have seen to be status quo for the year, heavy supply into quarter end pushed rates back in line with short dated treasuries. As banks start to button up Q3 and look to year end we may see a slight lull in activity, potentially leaving room for CD rates to drop slightly in a less crowded market.