U.S. Treasury yields hit two-decade highs as oil prices climb above $107
The 30-year Treasury yield rose to 5.446% and the 10-year to 5.15%, their highest levels in over 20 years, while Brent crude surpassed $107 per barrel, pushing fuel prices higher.
U.S. Treasury yields reached their highest levels in more than two decades on Thursday, with the 30-year bond yield climbing to 5.446% and the 10-year yield touching 5.15%, both unseen since the early 2000s. The rise in yields contributed to an increase in the average 30-year fixed mortgage rate, which rose to 7.26%, the highest since January 2025.
Oil prices also surged, with Brent crude trading above $107 a barrel and U.S. crude near $96, each up about 4% after a U.N. General Assembly dialogue between the United States and Iran failed to produce a clear path to ending the conflict. Higher oil prices have lifted diesel costs to a national average of $4.51 per gallon and regular gasoline to $4.48 per gallon, both significantly above levels recorded before the war began.
Equity markets slipped in early trading, with the S&P 500 down 0.5%, the Nasdaq Composite down 0.8%, and the Dow Jones Industrial Average falling nearly 300 points, marking a third consecutive day of losses.
The bond sell-off extended to global markets; Japan’s 10-year government bond yield reached its highest point since 1996, and Germany’s 10-year bund hit a peak not seen since 2009. Analysts noted that solid U.S. macro data, including a 4% unemployment rate and modest growth, coexist with heightened risks from trade tensions, energy supply concerns, upcoming elections, and potential disruptions in the AI sector.
A recent S&P Global report indicated that while U.S. business activity accelerated in September, input costs rose sharply, especially for fuel and transportation, prompting investors to anticipate further Federal Reserve rate hikes. Federal Reserve Bank of New York President John Williams said another rate increase could be appropriate by year-end, and Philadelphia Fed President Anna Paulson echoed the view that modest additional tightening may be warranted.
Treasury Secretary Scott Bessent has continued interventions in the bond market, including plans to repurchase up to $6 billion of 20- to 30-year Treasury securities. Earlier buybacks earlier in the month were followed by a rise in yields, contrary to the intended effect. Bessent defended the overall performance of the U.S. Treasury market despite mixed reactions from market participants.