The 5-year Treasury yield, recently trading near 4.57-4.62%, has climbed sharply from year-ago levels around 3.6% amid persistent inflation and shifting Federal Reserve expectations. Elevated year-over-year PCE and CPI readings near 3.4-3.7%—well above the 2% target and influenced by energy supply shocks and Middle East disruptions—have prompted the FOMC to hold the federal funds rate steady at 3.50-3.75% while increasing the share of officials projecting at least one hike by year-end. Stable labor market conditions, with unemployment near 4.1-4.3% and modest payroll gains, have supported the higher-for-longer policy stance, pushing Treasury yields higher across the curve and reducing near-term prospects for significant yield compression. The September 15-16 FOMC meeting and subsequent inflation releases will provide key signals on whether rate path expectations shift enough to allow the 5-year yield to test lower levels before 2027.