US 10-year yield hits 4.5% as Fed signals higher rates for longer

The DAX fell 2.1% in the week ending late October 2026, driven by the US Federal Reserve's announcement that interest rates would remain higher for longer. The yield on 10-year US Treasuries rose to 4.5%, the highest level since 2007. US national debt reached 33 trillion dollars this year, increasing the supply of bonds on the market. China and Saudi Arabia are reducing or halting purchases of US Treasuries, creating a buyer deficit. In Germany, debt service costs are projected to reach 40 billion euros this year, ten times the level from two years ago. In the US, interest payments now exceed the defense budget. The S&P Global Purchasing Managers Index for Germany came in higher than expected, and the IFO Business Climate Index is scheduled for release on Monday. US inflation data is due on Thursday. The US housing market remains active with new construction and sales, though homes are smaller, while the German market has collapsed. One analyst argues that the current debt levels and lack of bond buyers could push long-term yields above 5%, creating a 2007-like crisis scenario, while the other contends that the market has already priced in the Fed's decision and that yields will not exceed 5%, citing historical averages of 6-7%.