Recent Federal Reserve action and inflation dynamics dominate 5-year Treasury yield movements in September 2026. The FOMC raised the federal funds target range 25 basis points to 3.75–4% on September 16, citing elevated inflation and limited progress toward the 2% goal amid resilient growth and geopolitical oil supply risks. This hawkish shift, paired with August CPI data showing persistent price pressures, lifted the 5-year yield from early-month lows near 4.52% to approximately 4.79–4.89% by mid-September. Traders now price in additional tightening through year-end, with futures reflecting roughly even odds of a further hike by October. Key near-term catalysts include upcoming inflation releases, labor market data, and the next FOMC meeting, which could influence whether yields test lower levels before month-end or remain anchored higher by policy expectations and energy volatility.