Yields on the US Treasury's longest-dated bond rose to the highest level in almost two decades as investor concern over accelerating inflation fuels a selloff across global debt markets.
The 30-year yield rose seven basis points to 5.19% on Tuesday, reaching a level last seen on the eve of the 2007 global financial crisis, as pressure hits bond markets across Europe and Asia.
Global yields have surged in recent weeks as a jump in energy prices caused by the Iran war adds to fears over inflation, pushing investors to bet central banks, including the Federal Reserve, will have to raise interest rates. Mounting government deficits are also prompting investors to demand greater compensation to own longer-maturity debt.
“The bond market is pricing in a higher-for-longer rate policy, most visible in the long end of the curve where duration sensitivity is the greatest,” said Liz Templeton, a senior product manager at Morningstar. That reflects “ongoing uncertainty around Fed policy, energy-driven cost pressures, and heavier Treasury issuance.”
