US Treasury yields have surged to fresh two-decade highs following an extended bond selloff driven by inflation and fiscal concerns. Yields on the longest-dated bonds reached their highest level in more than twenty years, continuing an upward momentum that followed a sharp sell-off in government debt.
The 10-year Treasury yield rose to around 5.1 percent as investors grew more convinced that the Federal Reserve will raise interest rates again. Similarly, the yield on five-year Treasuries climbed above 5% for the first time in almost two decades. This fixed-income selloff has also eroded returns in state and local government debt, driving the rate on benchmark 30-year municipal bonds above the 5% threshold.
Strong economic data and fluctuating oil prices have further pushed yields higher. While yields fell early Wednesday as oil prices declined, they surged later as oil prices climbed back to $105 per barrel. Investors remain nervous about rising inflation, and traders are currently pricing in three Federal Reserve rate hikes in 2027 as strong data fuels bets on further policy tightening.