U.S. Treasury Yields Hit Highest Levels Since 2002 Amid Global Bond Selloff
U.S. benchmark Treasury yields climbed to their highest levels since 2002, driven by rising oil prices linked to Middle East conflicts and surging demand for capital. The selloff rippled across global bond markets, pushing U.K. 30-year yields to 6% and widening French-German debt spreads.
The U.S. benchmark yield climbed to its highest level since 2002 on Thursday as rising oil prices drove a renewed selloff in global bonds. The yield on the 10-year Treasury note rose as much as six basis points to 5.34 per cent, surpassing its 2007 peak. Earlier in the week, the rate on 30-year U.S. bonds hit a 24-year high.
Brent crude prices jumped as much as 2.8 per cent to over US$100 a barrel. Elevated oil prices tied to the war in the Middle East are rippling through the global economy, pushing investors to bet that central banks will further raise interest rates. Massive government borrowing and strong investment in artificial-intelligence infrastructure are also adding to the demand for capital, pushing up borrowing costs.
Steven Barrow at Standard Bank Advisory described the rise in government bond yields as a structural long-term development towards a "new normal."
The selloff extended well beyond the United States. According to a Bloomberg index, global government bonds posted their worst quarter since 2024. In the U.K., the yield on 30-year bonds hit six per cent for the first time since 1998. In France, the premium on 10-year debt over safer German peers jumped to 134 basis points, the highest since 2012.
Market participants are now looking ahead to upcoming economic data. Friday's payroll numbers are forecast to grow by 85,000 in September, according to a Bloomberg poll of analysts. Looking further ahead, traders expect the Federal Reserve to deliver four more quarter-point interest-rate hikes by the end of 2027.