U.S. Treasury yields are once again at their highest level since 2002. Stocks fell after hitting record highs.

Yields on 10-year and 30-year U.S. Treasury bonds returned to 24-year highs amid a resurgence in oil prices. As a result, U.S. stocks opened lower after the S&P 500 and Nasdaq Composite indices had set new records the previous day. Investors are concerned about accelerating inflation and the likelihood of further interest rate hikes by the Federal Reserve.

Yields on 30-year U.S. Treasury bonds rose during U.S. trading on October 7 to 5.73%, while yields on 10-year bonds rose to 5.36%—a high not seen since 2002, according to CNBC. This isn’t the first time yields have reached this level, but they returned to it after a slight pullback. Yields rise when bond prices fall.

The S&P 500 broad-market index was down 0.4% in the first few minutes of trading on Wednesday, while the tech-heavy Nasdaq Composite was down 0.6%. Both indices retreated from the record highs they reached on Tuesday. The blue-chip Dow Jones Industrial Average was down 0.7%.

The price of Brent crude rose 1.2% to $101.8 per barrel, though it had earlier reached $102.4 during the day. U.S. WTI crude gained 0.7% to $90.1 per barrel.

Movements in the U.S. bond market have spilled over into Europe: yields on 30-year British government bonds have returned to 6%, while comparable yields on French bonds rose by as much as 14 basis points, Bloomberg reported.

Bond yields resumed their rise after another spike in oil prices fueled concerns about accelerating inflation and further rate hikes by central banks, according to Bloomberg. Traders have increased their short positions in U.S. Treasuries, indicating that the sell-off may continue, the agency reports.

Oil prices rose above $102 per barrel following new attacks by Yemeni Houthis on Saudi Arabia. In addition, Iran’s attacks on tankers in the Strait of Hormuz have become more frequent, Bloomberg reported the day before. This has undermined the arguments of some investors that the bond market’s decline is excessive and that yields look attractive, the agency believes.

"We continue to believe that the market is caught between attractive absolute yield levels and the oil factor, which shows no signs of fading," Bloomberg quotes Mizuho strategist Evelyn Gomez-Liehti as saying.

The focus on Wednesday will be on the minutes from the U.S. Federal Reserve’s September meeting: investors will be looking for clues as to the regulator’s next moves. The swap market currently prices in a 24% probability of another Fed rate hike this month, but it is certain that at least one more rate hike will follow before the end of the year.

The renewed rise in yields is largely linked to the widening spread on long-term bonds: it has been increasing since the Fed’s September meeting, Bloomberg also reports. According to Bloomberg Economics, on October 6, the yield spread on 30-year Treasuries reached its highest level since 2011.

"The 'bear' bond market since the start of the year is primarily a reassessment of expectations regarding central banks," Bloomberg quotes Bank of America interest rate strategist Ralph Proisser as saying.

This article was AI-translated and verified by a human editor