U.S. 30-Year Treasury Yield Reaches Highest Level Since 2004
The yield on the 30-year U.S. Treasury rose above 5.44%, the highest in more than two decades, as strong economic growth and high energy prices push investors to demand higher returns.
U.S. borrowing costs for the 30-year Treasury hit a two-decade high on Thursday, with the yield climbing to just over 5.44% as bond prices fell. The rise follows data showing robust U.S. business activity and rising inflation pressures, which have revived expectations of further Federal Reserve rate hikes.
Global bond markets have been under pressure for months, driven by higher energy prices linked to the conflict in the Middle East, resilient economic growth, and concerns over elevated government debt levels. Despite the surge, investors have largely absorbed the higher yields, citing strong corporate profits and increased spending on emerging technologies such as artificial intelligence.
"Obviously the higher things go, the worse everything looks, and the more expensive U.S. mortgages will be, for example, and the bigger the debt interest burden of the federal government," said Chris Scicluna, head of economic research at Daiwa Capital.
"It's clearly evident in the PMI punch that we got yesterday which really showed capacity constraints with work backlogs going up and employment rising rapidly, fastest in five years, or four years. So this is putting pressure on prices and showing that the economy is growing," said Hank Calenti, global markets strategist at SMBC EMEA.
The higher yield signals investors' assessment of the cost of financing U.S. government borrowing over the long term. Germany's finance agency projected record federal borrowing of €525.5 billion in 2026, while Japan's 10-year bond yield also reached its highest level since 1996.
The increase has immediate implications for households, with 30-year mortgage rates climbing to around 7%, near their highest level in two years. Nonetheless, nominal U.S. growth remains near 8% in the second quarter, and officials such as New York Federal Reserve President John Williams note the economy's "remarkable resilience."
U.S. Treasury Secretary Scott Bessent has taken steps to curb rising borrowing costs, including expanding buybacks of long-dated debt, but the yields remain among the highest of the G7 nations.
"Treasuries are competing with the rest of the market to be purchased and so you know the question is how much higher could it go?" Calenti added.