10Y US Treasury yield on Sep 25, 2026?
Short Answer
The 10Y US Treasury yield is expected to finish at 4.89% or above on September 25, 2026, supported by strong upward momentum, a hawkish Federal Reserve outlook, and recent trading above 5.12%; the market prices this outcome at 99.0%.
1. Market Behavior & Drivers
The market's sharpest repricing occurred on September 23, driven by a surge in the underlying 10-year Treasury yield to a 19-year high near 5.14%. This bond market selloff was caused by a combination of hawkish factors, including stronger-than-expected US business activity, high oil prices, persistent hawkish commentary from the Federal Reserve, and weak demand at a five-year Treasury auction. The prediction market probability spiked in direct response to this move in the cash market.
Earlier price action was dictated by shifting geopolitical risks and monetary policy. On September 21 and 22, market probability dropped as falling oil prices, attributed to anticipated diplomatic engagement between the U.S. and Iran, reduced the energy-risk premium priced into yields. This period of easing followed a significant spike on September 19, which was a direct reaction to a 25-basis-point rate hike by the Federal Reserve.
- Yield appears likely to exceed 5.14% given intraday levels and expected modest upward bias.
- Firms like ING forecast yields above 5% on sustained hawkish Federal Reserve policy.
- Scheduled durable goods and consumer sentiment reports may influence the Sep 25 yield.
Who Wins and Why
| Outcome | Market | Model | Why |
|---|---|---|---|
| 5.15% or above | 31.0% | 41.3% | The 10Y yield was already near 5.14% on September 24, 2026, with an expected modest upward bias. |
| 5.03% or above | 89.0% | 91.7% | The ongoing upward trend and an expected modest upward bias favor elevated levels. |
| 5.05% or above | 86.0% | 89.3% | Yield is elevated with strong upward momentum, hawkish Fed outlook, and expert forecasts. |
| 5.11% or above | 57.0% | 64.1% | Strong upward momentum, expert forecasts, and a hawkish Federal Reserve outlook support the yield. |
| 5.21% or above | 7.0% | 9.1% | Upward momentum, hawkish Federal Reserve outlook, and potential catalysts could drive the yield. |
Current Context
US Treasury yields climbed sharply on September 24, driven by hawkish sentiment. The 10-year Treasury yield traded intraday between 5.12%–5.14% on Thursday, September 24, 2026, marking a 19-year high after rising over 13 basis points on Wednesday [1][2]. This selloff stemmed from stronger-than-expected US business activity, elevated oil prices, hawkish Federal Reserve commentary, and soft demand at a five-year Treasury auction [1][2]. The CME FedWatch tool indicated a roughly 70% probability of another 25-basis-point rate hike at the October FOMC meeting [1][2]. This occurred amid a broader global bond selloff, which saw the US 30-year yield reach approximately 5.44%, its highest since 2004 [1][3][4]. Investors increased bets on additional US rate hikes due to resilient growth, inflationary pressures, high energy prices, and government-debt concerns [1][3][4]. The September 16, 2026, FOMC Summary of Economic Projections outlined projected federal-funds rates of 4.1% for both 2026 and 2027 [5].
Expert models offer varied, but generally bearish, near-term yield forecasts. As of Thursday, September 24, 2026, the FRED data did not yet list an observed 10-year US Treasury yield for Friday, September 25 [6]. The latest FRED DGS10 observations were 4.96% on September 21 and 22, and 5.01% on September 18 [6][7]. An inferred point estimate for the September 25, 2026, 10-year Treasury constant-maturity yield is 4.95%, with an indicative near-term range of 4.85%–5.05%, factoring in recent volatility, a 2.33% 10-year breakeven inflation, and a 1.06 percentage-point 10-year-minus-fed-funds spread [6][5][8]. ING targeted 5.25% for the 10-year yield, expecting it to remain above 5% [9]. Convex projected the 10-year yield at 5.06% by year-end 2026, up from 4.94% on September 17 [10]. Sigmanomics showed a September 24 reading of 5.11% for the 10-year note, with a seven-day calibrated range of 5.02%–5.21% [11]. Prediction market evidence for September 25 was indirect; a September market assigned 52.5% probability to the 30-year yield breaching 5.21% before month-end [12].
Key economic data and Fed commentary will influence Friday's yield direction. On Friday, September 25, 2026, significant US events include durable-goods data at 8:30 a.m. ET, the revised University of Michigan consumer-sentiment report at 10:00 a.m. ET, and a Cleveland Fed appearance by Beth Hammack at 2:00 p.m. ET [13][14][15]. The preliminary September Michigan survey showed sentiment falling to 47.8 and one-year inflation expectations rising to 4.6% [15]. A final release confirming persistent inflation concerns could reinforce a hawkish market backdrop [15]. Official expert commentary highlighted uncertainty about the Fed's longer-run policy, persistent inflation, and the expanding government-bond market as primary Treasury-market forces [16][17][18]. The base-case forecast for September 25, 2026, suggests the 10-year yield will likely remain above 5.00%, trading around 5.05%–5.20%, with a central estimate near 5.12% [1][2][15]. A strong durable-goods report, firm sentiment and inflation expectations, or hawkish Fed remarks could push the yield towards 5.20%–5.25% [1][2][15]. Conversely, weak economic data or position-covering could pull it back towards 5.00%–5.05% [1][2][15].
Sources (18)
- 110-year Treasury yield continues to rise from 19-year highcnbc.com
- 2U.S. Treasury Yields Rise Above 5% Following Business Activity Data and Bond Auctionuk.advfn.com
- 3Global bond sell-off deepens amid fears US economy may be running too hot – business livetheguardian.com
- 4US 30-year bond yield rises to highest since 2004 as selloff deepens | Reutersreuters.com
- 5Summary of Economic Projections, September 16, 2026newyorkfed.org
- 6Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity, Quoted on an Investment Basis | FRED | St. Louis Fedfred.stlouisfed.org
- 7Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity, Quoted on an Investment Basis | FRED | St. Louis Fedfred.stlouisfed.org
- 8Interest Rate Spreads, Release Date: 2026-09-18 | ALFRED | St. Louis Fedalfred.stlouisfed.org
- 9Rates Spark: US 10yr likely gets above and stays above 5% ahead | articles | ING THINKthink.ing.com
- 1010Y Treasury Yield Forecast 2026 | Convexconvextrade.com
- 1110-Year Treasury Yield Forecast 2026 — Prediction | Sigmanomicssigmanomics.com
- 12How Low Will the 30-Year Treasury Yield Go in September? Odds | Lines.comlines.com
- 132026 Economic Calendarus.econoday.com
- 14Economic Calendar for the Week of 9/21 Through 9/25bentpinecapital.com
- 15What to Look Out for in Economic Data This Week (September 21-25) | Kiplingerkiplinger.com
- 16Supplying Ample Reserves - Federal Reserve Bank of New Yorknewyorkfed.org
- 17Transcript of Ellen Correia Golay on the Macro Musings Podcast - FEDERAL RESERVE BANK of NEW YORKnewyorkfed.org
- 18The 2026 U.S. Treasury Market Conference - FEDERAL RESERVE BANK of NEW YORKnewyorkfed.org
2. Price Chart
Historical Price (Probability)
Outcome probability
Date
3. Significant Price Movements
Notable price changes detected in the chart, along with research into what caused each movement.
Outcome: 5.11% or above
📈 September 24, 2026: 10.0pp spike
Price increased from 47.0% to 57.0%
What happened: The market's described "10.0 percentage point spike" on September 24, 2026, appears incorrect; the actual movement was approximately 10-14 basis points (0.10-0.14 percentage points) for the 10Y US Treasury yield, reaching its highest close since July 2007 [1]. This significant jump was primarily driven by a combination of stronger-than-expected U.S. business-activity data, rising oil prices above $100, hawkish Federal Reserve commentary suggesting increased October rate-hike expectations, and weak demand at a recent Treasury auction [1]. Social media was not identified as a primary driver, with no credible source linking any specific post to the market's move [2].
Outcome: 5.05% or above
📈 September 23, 2026: 86.0pp spike
Price increased from 0.0% to 86.0%
What happened: The reported "86.0 percentage point spike" on September 23, 2026, is likely a misstatement; the U.S. 10-year Treasury yield actually rose by approximately 14–17 basis points (0.14–0.17 percentage points) on that date, closing around 5.11% [3][4][5][6][7]. This movement was primarily driven by a confluence of traditional news and market factors, including exceptionally strong September S&P Global PMI data, hawkish comments from Fed Governor Michael Barr, higher oil/geopolitical risk, and a weak five-year Treasury auction [4][6][8][9]. No significant social media activity from key figures or viral narratives appeared to lead or coincide with this specific price move, with mentions on platforms like Stocktwits appearing to be commentary on the event rather than its catalyst [6]. Based on the available evidence, social media was mostly noise or irrelevant to this specific market movement.
Outcome: 4.97% or above
📉 September 22, 2026: 29.0pp drop
Price decreased from 40.0% to 11.0%
What happened: The primary driver of the prediction market price drop was easing geopolitical tensions and inflation concerns. On September 22, 2026, oil prices fell due to anticipated U.S.-Iran diplomatic engagement, reducing the energy-risk premium in Treasury yields [10][11][12]. This news coincided with a modest decline in the 10-year U.S. Treasury yield, which settled between 4.942% and 4.96% on that day, moving it further below the "4.97% or above" threshold [13][10][11][14]. No social media activity was identified as a driver of this price movement. Social media was irrelevant.
Outcome: 4.91% or above
📉 September 21, 2026: 18.0pp drop
Price decreased from 74.0% to 56.0%
What happened: The 18.0 percentage point drop in the prediction market price on September 21, 2026, for the 10Y US Treasury yield to be "4.91% or above" was primarily driven by market reactions to a perceived reduction in geopolitical risk, which led to a 3-4 basis point decline in the actual 10-year Treasury yield [15]. This decline was broadly attributed to optimism surrounding US-Iran talks at the UN General Assembly and lower oil prices [15]. Critically, social media commentary alleged that a post from former President Trump, expressing openness to an Iran peace deal, triggered rapid algorithmic buying of Treasuries, coinciding with and amplifying this market movement [16]. Therefore, social media served as a primary driver, particularly through its alleged role in triggering algorithmic reactions.
Outcome: 4.89% or above
📈 September 19, 2026: 70.0pp spike
Price increased from 0.0% to 70.0%
What happened: The 70.0 percentage point spike in the prediction market on September 19, 2026, indicating increased probability for the 10Y US Treasury yield to be 4.89% or above on September 25, 2026, was primarily driven by traditional financial news and economic factors. A Federal Reserve 25-basis-point rate hike, reported around September 17–18, intensified "hawkish Fed expectations" and concerns over U.S. activity and inflation, signaling sustained elevated yields [1][17][18][19]. The 10-year yield had already reached 5.01% on September 18 and continued to rise, hitting a 19-year high by September 23, making the outcome "4.89% or above" highly plausible [1][14]. Social media activity was explicitly noted as not being a documented catalyst for this market shift and was largely irrelevant [1][17][18].
Sources (19)
- 110-year Treasury yield continues to rise from 19-year highcnbc.com
- 2Hedge funds sour on basis trade as Treasury selloff continues | Reutersreuters.com
- 3Trading Day: US yields cross 5% threshold | 95 KQDS95kqds.com
- 4In Bond Land, A Meltdown – Heisenberg Reportheisenbergreport.com
- 5Treasury Yields Surge as Stocks Fall and Dollar Risesmottcapitalmanagement.com
- 6US 10-Year Yield Hits Nearly Two-Decade-High: El-Erian Says It ‘Shouldn't Be As Big A Surprise’stocktwits.com
- 7U.S. 10-year Treasury yield hits 19-year high amid war and debt concernsthehill.com
- 810-Year Treasury Yield Reaches 5.142% as Markets Reassess Fed Rate Outlookinvestorshub.advfn.com
- 9October Fed Hike Odds Hit 70%, US Yield Breakout Puts EUR/USD at Risk - ActionForexactionforex.com
- 10U.S. 10-Year Treasury Yields Fall to 4.942% on Sept 22, Down 2.10bp on Iran-U.S. Diplomatic Hopes | Gate Newsgate.com
- 1110-Year Treasury Yield Falls to 4.95% After… | Pomegra Briefspomegra.io
- 12Treasury Yield Curve Flattens as Oil Costs Ease and UN Diplomacy Calms Markets - TheCryptagonthecryptagon.com
- 13U.S. Treasury yields ease as investors await fresh jobs data, Fed commentscnbc.com
- 14Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity, Quoted on an Investment Basis | FRED | St. Louis Fedfred.stlouisfed.org
- 15US Treasuries Rally as Trump Opens Door to Iran Negotiations < Bonds/Forex < Article - Yonhap Infomaxen.infomaxai.com
- 1610-Year Yield Hits 5% and the Algorithmic Reaction | Coding4Food - Coding for Foodscoding4food.com
- 17Fed Hikes Into ‘Train Wreck’davidlinreport.substack.com
- 18After the Fed's First Hike in Three Years, the Tape Split at a 5% Treasuryainvest.com
- 19U.S. 10-Year Treasury yield reverses below 5% following Fed rate hike. - CME Groupcmegroup.com
4. Market Data
Contract Snapshot
This Kalshi prediction market resolves "Yes" if the 10-Year US Treasury yield is 5.13% or above, and "No" if it is below 5.13%. The maximum payout date for this market is September 25, 2026, with no further special settlement conditions specified.
Available Contracts
Market options and current pricing
| Outcome bucket | Yes (price) | No (price) | Last trade probability |
|---|---|---|---|
| 4.89% or above | $1.00 | $0.01 | 99% |
| 5.01% or above | $1.00 | $0.10 | 98% |
| 4.93% or above | $1.00 | $0.02 | 97% |
| 4.91% or above | $1.00 | $0.03 | 96% |
| 4.85% or above | $1.00 | $0.01 | 92% |
| 4.97% or above | $1.00 | $0.08 | 91% |
| 4.95% or above | $1.00 | $0.04 | 89% |
| 5.03% or above | $0.98 | $0.11 | 89% |
| 5.05% or above | $0.93 | $0.14 | 86% |
| 5.07% or above | $0.91 | $0.17 | 71% |
| 5.09% or above | $0.82 | $0.26 | 64% |
| 5.11% or above | $0.64 | $0.55 | 57% |
| 5.13% or above | $0.52 | $0.54 | 46% |
| 5.15% or above | $0.31 | $0.82 | 31% |
| 5.17% or above | $0.34 | $0.69 | 21% |
| 5.19% or above | $0.28 | $0.91 | 21% |
| 4.99% or above | $1.00 | $0.09 | 18% |
| 5.21% or above | $0.24 | $0.84 | 7% |
| 5.25% or above | $0.12 | $0.94 | 6% |
| 5.29% or above | $0.03 | $1.00 | 6% |
| 5.27% or above | $0.12 | $0.94 | 2% |
| 4.81% or above | $1.00 | $0.01 | 0% |
| 4.83% or above | $1.00 | $0.01 | 0% |
| 4.87% or above | $1.00 | $0.01 | 0% |
| 5.23% or above | $0.14 | $0.93 | 0% |
Market Discussion
The 10-year US Treasury yield reached 5.139% on September 24, 2026, marking its highest level since July 2007, driven by stronger-than-expected business activity, hawkish Federal Reserve commentary, and increased odds for an October rate hike [1][2][3][4][5][6][7][8][9]. While no official market close for September 25, 2026, is yet available, analysts generally anticipate the yield to remain elevated, with some estimates around 5.10%–5.15% [10][11][12][4][5][6][7][8][9]. However, high uncertainty persists due to the market being overbought [10][11][12].
Sources (12)
- 1U.S. 10-Year Treasury Yield Surges Past 5% to 19-Year High on Inflation Fears · TrustFinance Newsnews.trustfinance.com
- 210-Year Treasury Yield Reaches 5.142% as Markets Reassess Fed Rate Outlookinvestorshub.advfn.com
- 3U.S. Treasury Yields Rise Above 5% Following Business Activity Data and Bond Auctionuk.advfn.com
- 4www.thenewswire.comOctagon Agentthenewswire.com
- 5seekingalpha.comOctagon Agent
- 6seekingalpha.comOctagon Agent
- 7www.prnewswire.comOctagon Agentprnewswire.com
- 8247wallst.comOctagon Agent
- 9www.fxempire.comOctagon Agentfxempire.com
- 10How high will 10-year Treasury yield go in September?polymarket.com
- 1110-Year Treasury Yield Forecast 2026 — Prediction | Sigmanomicssigmanomics.com
- 12October Fed Hike Odds Hit 70%, US Yield Breakout Puts EUR/USD at Risk - ActionForexactionforex.com
5. Trust Index
Order book is critically thin.
Primary risk· Trade quality
How it adds up
Integrity80% of score76Good
Market integrity is low (61), but Integrity averages all three scores, so the other two pull it up. Only a critically low score would cap the total.
Trade quality20% of score43High Risk
Includes the cost to trade: a $1,000 order can't be filled here because the order book is too thin.
Trust score69Caution
Weighted blend with hard caps — a critically weak safety pillar, or a severe trading anomaly, caps the total regardless of the rest. Full methodology · About the Trust Index
Trust profile
Integrity4 screens run · 6 don't apply
6. How might the Sep 25 durable goods and University of Michigan consumer sentiment reports influence the 10-year yield's closing level?
| 10-year yield (Sep 24, 2026) | around 5.12% [1][2] |
|---|---|
| Durable goods orders (August, headline expectation) | decline 0.3% [3] |
| University of Michigan inflation expectations (preliminary) | jumped to 4.6% from 4.0% [4][5][6] |
The 10-year yield anticipated modest movement on September 25. On September 24, 2026, the 10-year Treasury yield stood around 5.12%, having recently reached a 19-year high [1][2]. This level was expected to be influenced by key economic reports scheduled for September 25 [1][2]. The base-case prediction for the day's close was approximately 5.12%, reflecting a modest upward bias [3][4][1][2]. Scheduled catalysts for Friday included the release of August durable-goods orders at 8:30 a.m. ET and the final September University of Michigan consumer sentiment report at 10:00 a.m. ET [7].
Upcoming economic reports presented specific market expectations and potential influences. For the durable goods report, Continuum Economics projected a 0.3% decline in the headline figure, but anticipated core measures, such as orders excluding transportation and non-defense capital goods orders excluding aircraft, to increase by 0.7% [3]. The market was expected to prioritize these core metrics; stronger-than-expected results could push yields higher by dampening expectations for Federal Reserve easing, while a weak core capital expenditure print might revive growth concerns, potentially lowering yields [8][9]. Regarding the University of Michigan report, the preliminary index was 47.8, and one-year inflation expectations had risen to 4.6% from 4.0% [4][5][6]. The final report's significance would lie in any revisions to both sentiment and inflation expectations, where confirmed weak sentiment alongside elevated inflation expectations (at or above 4.6%) would signal a mixed economic outlook [4][5][6].
Varying outcomes from the reports could significantly shift the 10-year yield. Given the 10-year Treasury was already near 5.12% on September 24, a close near current levels was more probable than another substantial one-day jump, unless both reports delivered significant, aligned surprises [3][8][1]. A scenario with strong core durable-goods measures combined with an upside revision to the Michigan report or higher inflation expectations would likely drive the 10-year yield above 5.15%, potentially nearing 5.20% [3][8][4][1]. Conversely, weak core goods data coupled with a lower Michigan reading and falling inflation expectations could favor a retreat towards approximately 5.00%-5.05% [3][8][4][1]. Should the data be mixed, such as weak sentiment paired with higher inflation expectations, a volatile close around 5.10%-5.15% would likely ensue [3][8][4][1]. The base-case reasoning suggested continued positive momentum in core durable goods and already elevated Michigan inflation expectations, with weak headline sentiment acting as a limiting factor for significant upside movement [3][4][1][2].
Sources (9)
- 110-year Treasury yield continues to rise from 19-year highcnbc.com
- 2October Fed Hike Odds Hit 70%, US Yield Breakout Puts EUR/USD at Risk - ActionForexactionforex.com
- 3Preview: Due September 25 - U.S. August Durable Goods Orderscontinuumeconomics.com
- 4Surveys of Consumerssca.isr.umich.edu
- 5US consumer sentiment deteriorates in September, inflation...reuters.com
- 6PNC Economics Research - Consumer Sentiment - September 2026pnc.com
- 7What to Look Out for in Economic Data This Week (September 21-25) | Kiplingerkiplinger.com
- 8Will Post-FOMC Digestion, Durable Goods, and China Price Signals Hold in Week 39?pro.edgex.exchange
- 9US durable goods beat forecasts, lifting Treasury yields and dollar as rates cut bets diminish - VT Marketsglobal-vtrader.com
7. What is the rationale behind recent forecasts from firms like ING and Convex for the 10-year Treasury yield to remain above 5%?
| ING 2026 10-year Treasury yield forecast | 5.1% (with extreme 5.25%-5.5% overshoot) [1][2][3][4][5] |
|---|---|
| Convex 2026 10-year yield projection | 5.06% (with 68% range of 4.06%-6.07%) [6][7][8] |
| FRED DGS10 (Sept 21-22, 2026) | 4.96% [9][10][11] |
Firms project sustained high Treasury yields due to market repricing. Financial institutions like ING and Convex forecast the 10-year Treasury yield to remain above 5%, driven by a multi-factor repricing in the long end of the market [1][2][3][4][5][6][7][8]. This repricing is primarily attributed to persistent inflation, significant fiscal deficits, and increasing Treasury issuance [1][2][3][4][5]. ING's analysis specifically highlights elevated inflation, fiscal deficits approximately 6% of GDP, expanding Treasury issuance, and higher real yields that reflect productivity expectations [1][2][3][4][5]. ING projects a 5.1% year-end 2026 yield, with a potential overshoot to 5.25%-5.5%, supported by a valuation framework that considers nominal GDP-like growth and fiscal-supply pressure as making above-5% yields plausible [1][2][3][4][5].
Convex's model predicts high yields, reflecting strong structural signals. Convex's regime-conditional model anticipates a 10-year yield of 5.06% by December 31, 2026, within a 68% probability range of 4.06%-6.07% [6][7][8]. Their market dashboard identifies real yields, term premium, inflation expectations, and fiscal supply as key factors contributing to high yields [6][7][8]. Structural indicators, such as a 10-year real yield ranging from 2.35%-2.44% and a 10-year term premium around 0.78%, suggest that long yields are not solely dependent on Federal Reserve short rate decisions [6][7][8]. Recent market observations around September 2026 showed the Treasury 10-year yield crossing and maintaining levels above 5%, even surpassing 5.1%, with FRED's DGS10 reporting 4.96% on September 21-22, 2026, following earlier prints of 5.00%-5.01% [2][12][13][9][10][11].
Sources (13)
- 1Rates Spark: US 10yr likely gets above and stays above 5% ahead | articles | ING THINKthink.ing.com
- 2Rates Spark: The overshoot commences | articles | ING THINKthink.ing.com
- 3Weathering the shocksthink.ing.com
- 4FOMC preview: Fed set to hike 25bp in recalibration move | articles | ING THINKthink.ing.com
- 5Rates Spark: Why 4.75% is a natural fit for the 10yr yield | articles | ING THINKthink.ing.com
- 610Y Treasury Yield Forecast 2026 | Convexconvextrade.com
- 7Fed Policy Outlook 2026, FOMC, Dot Plot, Rate Path | Convex | Convexconvextrade.com
- 8US Interest Rates Outlook 2026, Current State & Analysis | Convex | Convexconvextrade.com
- 9Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity, Quoted on an Investment Basis | FRED | St. Louis Fedfred.stlouisfed.org
- 10Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity, Quoted on an Investment Basis (DGS10) | FRED | St. Louis Fedfred.stlouisfed.org
- 11Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity, Quoted on an Investment Basis | FRED | St. Louis Fedfred.stlouisfed.org
- 12How high will 10-year Treasury yield go in September?polymarket.com
- 13How high will 10-year Treasury yield go in September?probsee.com
8. How has the spread between the 10-year and 2-year Treasury yields evolved in September 2026, and what does it signal for Fed policy expectations?
| Spread on Sep 21 | 20.8 bp [1][2][3][4] |
|---|---|
| October Fed hike probability (Sep 24) | 70% [5][6][7] |
| Spread on Sep 4 | 0.41 percentage points [8][9][10][11] |
The 10-year and 2-year Treasury yield spread significantly narrowed in September. The curve remained positive but unusually flat [1][4]. The spread, which was 0.41 percentage points on September 4, initially compressed from approximately 34 basis points (bp) after the September FOMC decision to 20.8 bp by September 21, before recovering slightly to about 22-25 bp by September 22 [1][4][2][3][8][9][10][11]. This flattening was substantially driven by a higher long-end yield, with the 10-year yield reaching around 4.94%-5.01% between September 17 and September 22 [3][12].
The narrowing spread signaled market expectations for restrictive Federal Reserve policy. This followed a 25 bp September hike that set the target range to 3.75%-4.00%, alongside indications from officials that further tightening might be necessary [4][13][14]. The compression in the 2s10s curve reflected increased near-term rate expectations relative to longer-run growth and inflation expectations [4][13][14]. A clear indicator of this policy expectation was the rise in the probability of another 25 bp Fed hike at the October meeting, which climbed to roughly 70% by September 24 in CME/FedWatch reporting, a sharp increase from about 9% a month prior [5][6][7].
Despite flattening, the positive 10s2s spread suggests future short-rate easing. Markets are pricing in some easing or lower future short rates relative to the long-run rate [3][8][10][11][15]. However, the elevated and volatile 10-year yield indicates that concerns such as term-premium, inflation, fiscal issues, or supply are limiting the extent of this easing signal [3][8][10][11][15]. Therefore, the curve's behavior suggests an expectation of easier policy at the front end, rather than an unambiguous signal of a recessionary collapse [3][8][10][11][15].
Sources (15)
- 1Daily Treasury Rates - U.S. Department of the Treasuryhome.treasury.gov
- 2Market Yield on U.S. Treasury Securities at 2-Year Constant...fred.stlouisfed.org
- 3Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity, Quoted on an Investment Basis | FRED | St. Louis Fedfred.stlouisfed.org
- 4US Treasury Yields Mixed as 10Y-2Y Spread Hits March Low on Fed Hawkish Tone | Gate Newsgate.com
- 5October Fed Hike Odds Hit 70%, US Yield Breakout Puts EUR/USD at Risk - ActionForexactionforex.com
- 6October Fed Rate Hike Odds Jump To Nearly 70% As Fed's Barr Says More Tightening Is 'Likely'stocktwits.com
- 7Fed Rate Hike Odds October 2026: The Skip Just Flipped | MacroOddsmacroodds.com
- 810-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity (T10Y2Y) | FRED | St. Louis Fedfred.stlouisfed.org
- 910-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity (T10Y2Y) | FRED | St. Louis Fedfred.stlouisfed.org
- 1010-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity | FRED | St. Louis Fedfred.stlouisfed.org
- 11Interest Rate Spreads, Release Date: 2026-09-18 | ALFRED | St. Louis Fedalfred.stlouisfed.org
- 12Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity, Quoted on an Investment Basis | FRED | St. Louis Fedfred.stlouisfed.org
- 13U.S. Treasury Yield Curve Flattens to 22 Basis Points, Inversion Risks Rise as Fed Rate Hike Bets Intensify | Gate Newsgate.com
- 14Fed Rate Decision September 2026: First Hike Since 2023 - Marimont Capitalmariemontcapital.com
- 15FedWatch - CME Groupcmegroup.com
9. What probabilities does the CME FedWatch Tool assign to different FOMC rate scenarios for the October 2026 meeting?
| Probability of 25 bp hike (October 2026) | 69.7% (as of Sept 24, 2026) [1][2][3] |
|---|---|
| Probability of no change (October 2026) | 30.3% (as of Sept 24, 2026) [1][2][3] |
| Implied target range before October 2026 | 3.75%-4.00% (as of Sept 24, 2026) [1][2] |
CME FedWatch probabilities for October 2026 were not directly available. The exact numerical probabilities assigned by the CME FedWatch Tool for the October 2026 FOMC meeting as of September 24, 2026, could not be directly established from web-retrieved CME sources [4][5][6]. It is important to note that CME FedWatch probabilities are market-implied estimates, derived from 30-Day Federal Funds futures, and are not forecasts from the CME or the Federal Reserve [4][5][7].
Market-implied probabilities significantly favored an October 2026 rate hike. Contemporaneous reports indicated that as of September 24, 2026, the CME FedWatch-implied scenarios for the October 28, 2026, FOMC meeting included a 69.7% probability of a 25-basis-point hike and a 30.3% probability of no change [1][2][3]. The implied current target range before the October meeting was 3.75%-4.00%, meaning the target range would be 4.00%-4.25% after a hike or remain at 3.75%-4.00% after a hold [1][2]. No separately reported meaningful October cut scenario was identified, with probabilities allocated between a hike and no change [1][2]. The probability of an October hike had reportedly increased sharply from 8.8% approximately one month earlier and 55.4% just one day prior [1][3].
The FedWatch Tool does not directly predict 10-year Treasury yields. While relevant for analyzing rate expectations, the CME FedWatch Tool does not directly predict the 10-year U.S. Treasury yield or provide a yield probability distribution itself [4][5]. It is utilized as an input for broader rate-expectation analysis in contexts such as prediction market questions.
Sources (7)
- 1October Fed Hike Odds Hit 70%, US Yield Breakout Puts EUR/USD at Risk - ActionForexactionforex.com
- 2Probability of Federal Reserve rate hike in October rises to 69.7%techflowpost.com
- 3October Fed Rate Hike Odds Jump To Nearly 70% As Fed's Barr Says More Tightening Is 'Likely'stocktwits.com
- 4FedWatch - CME Groupcmegroup.com
- 5CME FedWatch Tool User Guidecmegroup.com
- 6FedWatch API - CME Groupcmegroup.com
- 7Understanding the CME Group FedWatch Tool Methodologycmegroup.com
10. What has recent commentary from Federal Reserve officials, including Beth Hammack's Sep 25 appearance, signaled about the likely path of monetary policy?
| Federal-funds target | 3.75%-4.00% (September 16, 2026) [1] |
|---|---|
| 10-year Treasury yield | 5.113%-5.142% (September 24, 2026) [2] |
| Median policy rate projection | 4.1% (year-end 2026 and 2027) [3] |
Federal Reserve officials consistently signal a hawkish monetary policy path. The Federal Open Market Committee (FOMC) recently increased the federal-funds target by 25 basis points to 3.75%-4.00% on September 16, 2026, solidifying expectations for continued tightening due to persistent inflation concerns [1]. This decision reinforced a "higher-for-longer" policy stance [1]. The median projection from the Summary of Economic Projections (SEP) indicated a policy rate of 4.1% at year-end 2026 and 2027, with 16 of 18 participants projecting at least one more hike in 2026 [3]. Federal Reserve official Beth Hammack's commentary, including her September 25 appearance, highlighted this hawkish outlook; she notably shifted from a conditional hold to a July dissent favoring a rate hike, emphasizing that inflation remained above 3% and policy was not sufficiently restrictive [4].
Hawkish signaling significantly impacted market rates, driving yields higher. The 10-year Treasury yield surged above 5.1%, reaching 5.113%-5.142% by September 24, marking its highest level since 2007 [2]. This movement reflected increased market-implied odds for an October hike, which rose to approximately 68%-70%, with swaps pricing in about three 25-basis-point hikes over the subsequent year [2]. The immediate backdrop leading up to the September 25 resolution favored yields holding around or above 5%, with the base-case prediction for the 10-year Treasury yield near 5.00% [2]. A more hawkish appearance by Hammack or renewed inflation concerns posed an upside risk to this market outlook [5].
Sources (5)
- 1Transcript of Chairman Warsh’s Press Conference, September 16, 2026federalreserve.gov
- 2Understanding the "Black Wednesday" of US Treasuries: "Perfect Storm" Strikes, "October Rate Hike" Winds Rise | HTX Insightshtx.com
- 3The Fed - September 16, 2026: FOMC Projections materials, accessible versionfederalreserve.gov
- 4Watch CNBC's full interview with Cleveland Fed’s Beth Hammackcnbc.com
- 5Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity, Quoted on an Investment Basis | FRED | St. Louis Fedfred.stlouisfed.org
11. What Could Change the Odds
Key Catalysts
On September 25, 2026, scheduled US economic releases included August durable-goods orders (headline and core) at 8:30 a.m. ET and the final University of Michigan September consumer-sentiment data, including inflation expectations, at 10:00 a.m. ET [1][2][3]. The Atlanta Fed's GDPNow model was scheduled for an update on September 25, following its September 17 estimate of 5.0796% annualized real GDP growth for 2026 Q3 [4][5][6][7]. The official 10-year Treasury yield from the Fed's H.15 release was expected after market close, with the FRED calendar listing 3:15 p.m. ET for publication [8][9]. No FOMC meeting or major BLS inflation or employment data was scheduled for this date [10][11][12][13][14][7].
The 10-year US Treasury yield closed at ~5.13% on Sep 24, 2026, marking its highest close since 2007, following a rise from ~4.64% on Aug 25 [7]. Broader market drivers included a hawkish Federal Reserve bias, with the FOMC having hiked on Sep 15–16, and ~71% odds priced for an October quarter-point hike [15][1][7]. Strong growth signals, such as September PMI flash indicating ~5% Q3 GDP and GDPNow at 5.1%, contributed to a bearish outlook for bonds [7]. Inflation concerns, exacerbated by Brent crude above ~$100–102 on US-Iran tensions and a strong oil-yield correlation, also supported higher yields [15][7]. Furthermore, recent weak supply auctions (5-year on Sep 23, 7-year on Sep 24) and elevated term premiums, with one forecast seeing the 10Y reaching 5.5% within a year, were bearish for bonds [15][7].
Potential catalysts for higher yields (bearish for bonds) on September 25 included durable-goods and consumer-sentiment data materially stronger than expectations, increased inflation expectations, or hawkish interpretations of Fed comments [1][2][3][16]. Conversely, weaker orders, soft sentiment, or declining inflation expectations would support lower yields (bullish for bonds) [1][2][3][16]. A credible Iran de-escalation, an oil price drop below $100, cooling CPI, or a dovish Fed pivot could also drive yields lower [15][1][7].
Key Dates & Catalysts
- Strike Date: September 25, 2026
- Expiration: September 27, 2026
- Closes: September 25, 2026
Sources (16)
- 1Forex Economic Calendar for September 25, 2026forex.tradingcharts.com
- 2Economic Calendar - Stooqstooq.com
- 3Calendar | Forex Factoryforexfactory.com
- 4GDPNow (GDPNOW) | FRED | St. Louis Fedfred.stlouisfed.org
- 5Atlanta Fed GDPNowatlantafed.org
- 6GDPNow - Federal Reserve Bank of Atlantaatlantafed.org
- 7invezz.comOctagon Agent
- 8Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity, Quoted on an Investment Basis | FRED | St. Louis Fedfred.stlouisfed.org
- 9Economic Release Calendar - H.15 Selected Interest Rates | FRED | St. Louis Fedfred.stlouisfed.org
- 10Calendar: September 2026 - Federal Reserve Boardfederalreserve.gov
- 11The Fed - September 15-16, 2026 FOMC Meetingfederalreserve.gov
- 12The Fed - Meeting calendars and information - Federal Reservefederalreserve.gov
- 13Schedule of Selected Releases for September 2026blsmon1.bls.gov
- 14Schedule of Selected Releases 2026 - Bureau of Labor Statisticsbls.gov
- 15Federal Reserve Board - H.15 - Selected Interest Rates (Daily)federalreserve.gov
- 162026 Economic Calendarus.econoday.com
13. Historical Resolutions
Historical Resolutions: 20 markets in this series
Outcomes: 11 resolved YES, 9 resolved NO
Recent resolutions:
- KXUST10A-26SEP18-T5.08: NO (Sep 18, 2026)
- KXUST10A-26SEP18-T5.06: NO (Sep 18, 2026)
- KXUST10A-26SEP18-T5.04: NO (Sep 18, 2026)
- KXUST10A-26SEP18-T5.02: NO (Sep 18, 2026)
- KXUST10A-26SEP18-T5.00: YES (Sep 18, 2026)
