The Federal Reserve is widely expected to raise interest rates at this week's policy meeting. © ReutersSeptember 15, 2026 00:20 JSTUpdated on September 15, 2026 01:53 JSTNEW YORK (Reuters) -- Benchmark 10-year Treasury yields hit the key psychological level of 5% on Monday for the first time since October 2023 ahead of this week's Federal Reserve meeting, at which the U.S. central bank is widely expected to raise interest rates.The milestone is a threshold that analysts say could ripple through the U.S. economy and threaten the bull market in stocks by denting the relative appeal of U.S. equities."It's definitely a key psychological level. If you talk to investors, a lot of times they have those rounded numbers that they're saying, 'if we hit X level, that's where I find it attractive, that's where I buy the dip'," said Molly Brooks, U.S. rates strategist at TD Securities.The yields fell back below 5% after the initial hit. They were last flat on the day at 4.973% after getting as high as 5.0142%.Brooks said holding below 5% would signal investor demand and a resistance level at that threshold."If we blow through it, that's the other side of it where investors are clearly worried about the long end and we might see rates move even higher from here," she added.High inflation, rising interest rate expectations, heavy corporate and government debt supply, a strong growth outlook and concerns about the long-term U.S. fiscal trajectory have combined to send yields higher in the past month."The budget and the deficit and the overall makeup of our debt continues to grow," said Tom di Galoma, managing director at Mischler Financial.Yields jumped after data on Friday showed U.S. consumer prices accelerated in August, boosting bets that the Fed will hike rates to stem inflation that is already running well above its 2% annual target.That was "probably the nail in the coffin," said di Galoma.Surging oil prices have added to concerns that inflation will keep worsening as the war with Iran drags on. Oil prices jumped more than 4% on Monday, after new strikes on Saudi Arabian energy infrastructure and attacks on ships in the Middle East compounded supply concerns.A strong jobs picture, with employers adding 162,000 jobs last month, also reinforced the view.Fed funds futures traders are now pricing in 89% odds of a hike at the conclusion of the Fed's two-day meeting on Wednesday.Traders will also focus on updated interest rate projections in the Fed's "dot plot," which may show that some policymakers anticipate an additional rate hike this year. The last quarterly projections at the Fed's June meeting showed nine Fed officials expected a rate hike by year-end.The 2-year note yield, which typically moves in step with Fed interest rate expectations, fell 0.53 basis points to 4.639%.The yield curve between 2- and 10-year notes flattened to 33 basis points.Demand for longer-dated debt will also be tested when the Treasury sells $13 billion in 20-year bonds on Tuesday. The U.S. government will also sell $19 billion in 10-year Treasury Inflation-Protected Securities on Thursday.