US 30-Year Treasury Yield Hits 5.181%, Highest Since 2007

U.S. bond investors sold Treasuries heavily on May 19 as inflation worries intensified, sending the 30-year Treasury yield as high as 5.181%, its highest level in 19 years. That was 3.5 basis points above the previous session and the highest since July 2007, before the global financial crisis.

The 10-year Treasury yield, a key benchmark for mortgages, auto loans and credit-card debt, rose about 3.6 basis points to 4.659%. It also reached its highest level since January 2025. The 2-year Treasury yield, which is sensitive to Federal Reserve policy, climbed 1 basis point to 4.10%. Bond yields move inversely to prices.

The three major U.S. stock indexes opened lower.

CNBC reported that a jump in oil prices caused by prolonged tensions between the United States and Iran had been reflected in a string of inflation reports released last week, unnerving bond investors. Traders have consequently come to price in the possibility that the Fed's next move could be a rate hike rather than a cut.

"The global bond market is being affected by higher inflation driven by soaring energy costs, concerns over fiscal deficits and, in the U.K.'s case, national political turmoil," Mohit Kumar, chief economist at Jefferies, said.

Even if an agreement is reached in the Middle East, oil prices are unlikely to return to prewar levels for some time, Kumar added. He expects them to be 25% to 30% higher in six months.

International benchmark Brent crude futures fell about 1.5% to $110.38 a barrel on the day. U.S. West Texas Intermediate crude was little changed at $108.67.

Kumar also highlighted the impact of severe government deficits in many countries. "Every government will provide fuel subsidies to households, which will in turn lead to more borrowing and put pressure on long-term debt," he said.

Still, he said rate hikes cannot be justified even though markets are pricing them in, given that inflation is likely to rise only as much as growth slows.

According to a Bank of America survey released that day, 62% of global fund managers expect the 30-year U.S. Treasury yield to reach 6%. That is the highest share since late 1999 and implies about 85 basis points of upside from current levels.

The sharp rise in yields risks hurting U.S. consumers and undermining the bull market in stocks. The recent surge in rates has already put pressure on the U.S. equity market.

Kim Jung-a, guest reporter at Hankyung.com, kja@hankyung.com