Yields on 30-year U.S. Treasury bonds have reached their highest level since 2004
Traders reacted to strong U.S. economic data, hawkish comments from the Fed, and high oil prices / Photo: X / NYSE
On September 24, the yield on 30-year U.S. Treasury bonds rose to about 5.44%—the highest level since 2004, according to CNBC. The yield on benchmark 10-year Treasury bonds, to which mortgage rates are tied, reached 5.14%, its highest level since July 2007. The yield on 2-year Treasuries fell to 4.88%, but remained near its 2023 high.
The rise in the cost of government debt on Thursday marked a continuation of the sell-off in the U.S. Treasury market. The day before, the yield on 10-year Treasuries posted its largest one-day jump since April 7, 2025: traders reacted to stronger-than-expected U.S. economic data, hawkish comments from a Fed official, and high oil prices.
The sell-off in government debt has also spread to global markets. Yields on 10-year Japanese government bonds rose to their highest level since August 1996. Yields on British gilts and German bunds also rose, and a number of European bonds hit multi-year highs in yields.
Economic data from the U.S. has heightened expectations of further rate hikes by the Fed. According to the CME Group’s FedWatch tool, traders estimate the probability that the Federal Open Market Committee will raise rates again at its October meeting at more than 75%. A week ago, that probability stood at about 49%.
“A combination of fiscal, economic, geopolitical, and supply-side inflationary factors has placed the bond market in less familiar territory. The recent rise in yields can no longer be explained solely by concerns over the deficit,” CNBC quotes Mike Sanders, head of fixed-income at Madison Investments. He explained that the market is now pricing in four rate hikes by the end of next year, which is pushing the Fed “toward further policy tightening at a time when the risk of monetary policy error is increasing.”
Federal Reserve Board member Michael Barr said Wednesday that “further adjustments to monetary policy” will likely be needed to bring inflation back to the target level. Speaking in London on Thursday, John Williams, president of the Federal Reserve Bank of New York, said it would be “reasonable” to expect another Fed rate hike before the end of the year.
This article was AI-translated and verified by a human editor
