U.S. government bond yields climbed Tuesday as investors sold Treasurys and renewed inflation fears pushed the 30-year yield to its highest level in nearly two decades.
The 30-year Treasury yield rose 3.5 basis points to 5.181%, its highest mark since July 2007. The benchmark 10-year Treasury note climbed nearly 3.6 basis points to 4.659%, its highest level since January 2025. The 2-year Treasury yield rose 1 basis point to 4.10%.
One basis point equals 0.01%. Bond yields move inversely to prices, writes CNBC.
U.S. 30-Year Treasury Yield closed at 5.14%, its highest closing level since the run-up to the Global Financial Crisis đ¨đđşđ¸ pic.twitter.com/HpPeRqQLXG
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The move followed growing concern that inflation pressures are returning, driven in part by higher oil prices tied to the U.S. conflict with Iran. Last weekâs inflation data added to those concerns and prompted some traders to consider whether the Federal Reserveâs next move could be a rate increase rather than a cut.
Mohit Kumar, chief economist and strategist at Jefferies, said the pressure in global bond markets reflects several forces converging at once: persistent inflation, elevated energy costs, heavy government borrowing, and political uncertainty abroad, including in the United Kingdom.
âEven if we get a [Middle East] deal ⌠oil is not going back to pre-war levels. We think itâs going to be 25-30% higher in six monthsâ time,â Kumar told CNBCâs âEurope Early Editionâ Tuesday.
âEvery government is going to provide subsidies for households for fuel â which means we have more borrowing, and thatâs a pressure at the long end of the curve,â the economist said.
Still, Kumar warned that markets may be moving too far in pricing in additional rate hikes. He said âitâs not justifiedâ because inflation could rise even as economic growth weakens.
Oil prices eased somewhat Tuesday but remained elevated. Brent crude, the global benchmark, traded about 1.5% lower near $110.38 per barrel, while U.S. West Texas Intermediate crude was roughly flat at about $108.67.
A Bank of America survey released Tuesday found that 62% of global fund managers expect the 30-year Treasury yield to reach 6%, a level last seen in the late 1990s and about 85 basis points above current levels. Only 20% said they expect the 30-year yield to move toward 4%.
Long-term yields remained elevated overseas as well. Germanyâs 30-year bund yield stood at 3.684%, Britainâs 30-year gilt yield edged up to 5.773%, and Japanâs 30-year yield reached a fresh record this week.
The increase in borrowing costs could place new strain on American households, businesses, and financial markets. Higher Treasury yields tend to push up mortgage rates, raise the cost of consumer and corporate credit, and make stocks less attractive by offering investors higher returns on safer government debt.
U.S. equities have already come under pressure as yields have risen, showing how quickly inflation fears can move from the bond market into the broader economy.
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