U.S. Treasury yields climbed to multidecade highs on Thursday as investors increased bets that the Federal Reserve will deliver another interest rate hike.
The 30-year Treasury bond yield rose 5 basis points to 5.456%, reaching its highest level since 2004. The benchmark 10-year Treasury note yield, which is tied to mortgage rates, gained more than 4 basis points to 5.162%, its highest since July 2007. The 2-year note yield added more than 1 basis point to 4.908%, remaining close to a 2023 high.
One basis point equals 0.01%, and bond prices move inversely to yields.
The sell-off spread across global bond markets as well. Japan's 10-year JGB yield rose to its highest level since August 1996. U.K. Gilts and German Bunds also moved higher, with yields on several European bonds touching fresh multi-year highs.
Thursday's moves followed a sharp U.S. Treasury rout on Wednesday. The 10-year yield posted its biggest one-day jump since April 7, 2025, as traders reacted to stronger-than-expected U.S. economic data, hawkish remarks from a Federal Reserve official and elevated oil prices.
Mike Sanders, head of fixed income at Madison Investments, said the combination of fiscal, economic, geopolitical and supply-side inflation pressures has pushed bond markets into less familiar territory. In his view, the recent rise in yields can no longer be explained simply by deficit concerns.
According to CME Group's FedWatch tool, traders were last pricing in a more than 75% chance that the Federal Open Market Committee will raise rates again at its October meeting. A week earlier, that probability was about 49%.
Sanders added that with markets pricing in four rate hikes through next year, the Fed is being pushed toward tighter policy at a time when the risk of a policy mistake is increasing.
Michael Barr, a member of the Fed's Board of Governors, said in a speech on Wednesday that “further policy adjustments” are likely to be needed to bring inflation back to target. Speaking in London on Thursday, New York Federal Reserve President John Williams said it would be “reasonable” to expect another Fed rate hike by year-end.
