U.S. 10-year Treasury yield breaks record: 5.304%, the highest level since 2002

The yield on the U.S. 10-year Treasury climbed on Wednesday afternoon to 5.304%, breaking the 2007 intraday peak of 5.303% and reaching its highest level since May 2002, according to Tradeweb data.

The rise came after the U.S. Commerce Department revised second-quarter gross domestic product (GDP) growth up to 2.2%, from the 1.5% previously estimated, while the personal consumption expenditures (PCE) price index — the Federal Reserve’s preferred inflation gauge — held unchanged at 3.4% in August, still well above the Fed’s 2% target, as the Wall Street Journal reports in its live markets coverage.

The strong economic data led investors to revise their expectations for the Fed’s next move: the market now gives roughly a 37% chance of an interest rate hike at the October meeting.

Stocks closed the day mixed: the Dow Jones fell 0.9%, the S&P 500 lost 0.3%, while the Nasdaq gained 0.2%. Meanwhile Brent oil climbed 0.9%, to around $103.53 a barrel.

Higher bond yields make borrowing more expensive for everyone — families, businesses and governments — and put pressure on stock prices and other investments. That is precisely why the market is selling bonds: when their prices fall, yields rise.