The US 10-year yield climbed above 5.1%, its highest since October

What happened

The yield on the 10-year US Treasury rose 3 basis points on Friday 13 November and 27 basis points over the week, to 5.13%, according to an end-of-week market summary. On Friday it touched 5.17%, its highest since October, Yahoo Finance reported. Shorter yields moved even more sharply earlier in the week: the 2-year jumped 19 basis points on 10 November alone (our story).

Stocks held on to gains for the week, led by chipmakers: the S&P 500 rose 2.15%, the Nasdaq Composite 1.92% and the Dow 1.83%. But on Friday, as yields climbed, the S&P 500 fell 0.75% and the Nasdaq 1.24%.

Why the yield rose

• Inflation surprises. Core consumer prices rose 0.3% in October against a 0.2% forecast (our story), and producer prices showed costs spreading into food and freight (our story).
• The Fed. Markets now treat a December rate rise as all but certain, and officials have talked about more: Governor Michelle Bowman said rate rises may be needed.
• Oil. Brent rebounded towards $96 a barrel during the week, after falling below $90 on 10 November, amid uncertainty over peace efforts with Iran.

Why 5% matters

The 10-year Treasury yield is the benchmark for much of the world's borrowing. US mortgage rates are priced off it, and so are many company loans. It is also the rate used to value future profits in share prices: when it rises, a dollar of profit in ten years is worth less today. Our mechanic why bond prices fall when yields rise explains the arithmetic, and our guide to bond yields explains what drives them.

Where it sits in the chain

This is Link 2, bonds, driven by Link 1, inflation: inflation surprises raise expected rates, the 10-year yield rises, and borrowing costs across the economy follow.

What to watch

• Next week's Freddie Mac mortgage survey, to see whether the rise in yields reaches home loans.
• Fed speeches before the December meeting.
• Whether the 10-year holds above 5%.