On September 14, ahead of this week's Federal Reserve meeting, the benchmark 10-year U.S. Treasury yield rose to the critical psychological level of 5% on Monday, marking the first time in nearly three years. The market widely expects the Federal Reserve to raise interest rates to curb inflation. Data released last Friday showed that consumer prices in the U.S. accelerated in August, intensifying market expectations for a rate hike by the Fed to tackle inflation. Tom di Galoma, Managing Director at Mishler Financial, stated that this "could be the last straw that breaks the camel's back." Over the past month, yields have continued to rise due to increasing rate hike expectations, a surge in corporate and government debt supply, optimistic economic growth prospects, and concerns about the long-term fiscal path of the U.S. Galoma noted, "Our budget, deficit, and overall debt structure continue to expand." Moving forward, whether the 10-year Treasury yield can maintain its position above 5% will be a critical test of whether the economy and stock market can support higher interest rate levels.
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