U.S. bond yields rose to their highest levels in nearly 20 years, as markets increased bets that the Fed will continue raising rates. U.S. bond markets faced strong selling pressure on September 23, pushing the 5-year Treasury yield above 5% for the first time since 2007. The 10-year yield reached as high as 5.13%, also the highest level since before the global financial crisis, while the 30-year yield neared 5.4%. The upward pressure on yields stemmed from stronger-than-expected U.S. economic data, rising oil prices, and particularly weak demand at the $70 billion auction of 5-year Treasuries. The auction closed at a yield of 5.033%, about 31 basis points higher than pre-auction market expectations, with a bid-to-cover ratio of just 2.21x. Interest rate markets now fully price in approximately three additional 25-basis-point Fed hikes over the next year, with growing hedging activity reflecting the possibility of a fourth hike. This signals a significant shift in monetary policy expectations toward tighter conditions following the Fed’s recent rate hike in September. The sharp rise in yields also pressured risk assets: the S&P 500 declined about 0.8%, while the Nasdaq fell over 1%, as yields above 5% made U.S. Treasuries more attractive than stocks and crypto in attracting capital flows.