The 30-year US Treasury yield briefly hit 5.45% on Thursday local time, marking its highest level since 2004 amid an intensifying selloff in long-dated US bonds. The benchmark 10-year Treasury yield, a global pricing anchor for assets, also climbed to 5.15% intraday, the highest since July 2007.
The bond rout stems from a confluence of drivers. US PMI data surprised to the upside with rising input costs, reviving fears of inflation reacceleration. Brent crude topped US$105, adding inflationary pressure from energy. Mounting US fiscal deficits and surging Treasury supply have forced investors to demand a higher long-term risk premium for locking up capital for 30 years. Weak demand at recent US Treasury auctions further amplified upward pressure on long-end rates.
The sharp rise in long-term borrowing costs lifts rates for US mortgages, corporate loans and federal debt service. It ripples across global markets, compressing valuations of equities, gold and other assets. Government bonds worldwide traded lower in tandem, with Japanese long-bond yields also hitting multi-year highs as the global fixed-income selloff spread.
Traders have repriced Federal Reserve policy, with odds of another rate hike rising materially. Market focus has shifted beyond near-term policy rates toward deeper concerns over US long-run fiscal sustainability and a higher real rate regime.