US 30-year Treasury yield hits 5.31%, highest since 2007

The yield on the 30-year US Treasury bond soared to its highest level since 2007, driven by mounting national debt and a surge in government bond issuance.

The 30-year Treasury yield rose 5 basis points — one basis point equals 0.01 percentage point — to 5.31% on Tuesday, according to Bloomberg. The move brought yields close to the 5.44% recorded in June 2007, the early days of the global financial crisis, marking the highest level in roughly 19 years.

The climb follows a sustained selloff in long-term Treasuries that began after the US Treasury Department's Aug. 13 auction of $25 billion in new 30-year bonds yielded 5.22%, the highest rate at such an auction since 2001.

The rise in long-term yields reflects a combination of factors: growing US national debt, heavy government bond issuance and persistent inflation concerns.

Investors are demanding higher returns on long-term Treasuries to account for the government's expanding fiscal burden and the risk of rising prices, pushing bond prices lower and yields higher.

The AI boom has spurred increased corporate borrowing, lifting long-dated corporate bond issuance, while demand from investors who traditionally buy long-term government bonds has weakened — both adding upward pressure on long-term yields.

Weak US July jobs data and a decline in retail sales have eased some pressure on the Federal Reserve to raise its short-term benchmark interest rate, but inflation running above 3 percent remains a burden for markets.

Anshul Pradhan of investment bank Barclays said stabilizing the market would require a combination of reduced fiscal spending, a slowdown in AI-related bond issuance and a shift in the Treasury's issuance strategy.