U.S. 30-year Treasury yield reaches 2007 high as market questions Fed's inflation strategy
The 30-year Treasury yield rose to 5.22%, its highest level since 2007, after the Federal Reserve left short-term rates unchanged, prompting concerns that inflation may stay elevated.
Long-term U.S. borrowing costs jumped on Wednesday, with the 30-year Treasury yield climbing 0.11 percentage point to 5.22%, its highest level since 2007. The 10-year yield also rose, reaching 4.67%, near its peak for the year. The moves followed the Federal Reserve’s decision to keep short-term rates steady, contrary to some market expectations for a hike.
"The market is concerned that the Fed not hiking is going to result in persistently higher inflation," said Subadra Rajappa, an interest-rate strategist at Société Générale.
Analysts linked the rise to growing doubts about the Fed’s ability to contain price pressures, noting that the 30-year breakeven inflation rate posted its largest one-day increase since November 2024. They also cited broader factors such as higher global government spending and expectations of accelerated growth from artificial-intelligence investments.
Barclays inflation analyst Jonathan Hill said the sharp increase underscores how sensitive long-end yields are to perceptions of the Fed’s credibility. Federal Reserve Chairman Kevin Warsh reiterated his commitment to lowering inflation but offered no specific policy roadmap, adding to investor uncertainty.