US 10-year Treasury yield tops 4.82%, highest in 34 months

The yield on the 10-year US Treasury note surged past 4.82% during trading, marking its highest level in 34 months, as rising oil prices, fears of further Federal Reserve rate hikes and mounting fiscal deficits spread a bond selloff from the United States to Japan, the United Kingdom and Germany.

According to the Wall Street Journal, the 10-year yield climbed as high as 4.821% during trading Wednesday (local time), extending its advance after closing at 4.797% the previous day and reaching its highest point since Nov. 1, 2023 — roughly two years and 10 months ago.

The yield later retreated to around 4.79%, giving back some of its gains, but remained elevated. Selling pressure in the bond market showed little sign of easing despite weaker-than-expected August private payroll data and an intraday pullback in crude oil prices.

Yields across maturities rose in tandem. The 2-year Treasury yield, sensitive to monetary policy expectations, climbed as high as 4.41% during trading — its highest since January 2025. The 30-year yield briefly touched 5.30% before pulling back to around 5.25%.

One of the key forces weighing on bond markets has been a renewed surge in oil prices. Geopolitical tensions in the Middle East escalated after the United States and Iran resumed military hostilities following roughly a month of relative calm, pushing Brent crude above $95 a barrel. Higher energy prices could reignite inflation, potentially forcing the Fed to keep rates elevated longer than expected or to raise them further — a prospect that has deepened concern in bond markets.

Adding to the pressure is the sheer volume of government debt issuance. The BlackRock Investment Institute said there is "little reason" for upward pressure on Treasury yields to ease, citing persistent inflation, large-scale government borrowing and growing demand for private investment capital.

The bond selloff is not confined to the United States. Japan's 10-year government bond yield crossed 3% during trading, hitting its highest level since 1996 — a roughly 30-year high.

The UK's 30-year gilt yield surged to around 5.92% during trading, its highest since 1998. German and French 10-year yields also climbed to their highest levels since 2011 and 2008, respectively.

Analysts say that while economic conditions vary by country, a common thread — inflationary pressure from rising energy costs and heavy government debt loads — is shaking global bond markets simultaneously.

The Wall Street Journal noted that the G20 finance ministers and central bank governors meeting produced no clear solutions to fiscal deficits, inflation or geopolitical risks, and said bond markets are in effect giving world leaders a failing grade.

US Treasury Secretary Scott Bessent told the G20 meeting that "the only way out of this is to grow our way out" when addressing the debt problem.

Yet the United States posted GDP growth of just 2.1 percent over the past year, while the federal fiscal deficit is expected to exceed 6 percent of GDP in the current fiscal year. Analysts say that without a significant acceleration in economic growth, debt burdens cannot easily be resolved through growth alone.

Ajay Rajadhyaksha of Barclays said markets expect AI to lift growth rates but also see supply disruptions and massive government debt amplifying price pressures, keeping short-term interest rates higher for longer than in the past. He added that today's elevated US benchmark interest rates may not be a temporary phenomenon but rather a "new normal."