(Bloomberg) -- Yields on the US Treasury's longest-dated bond rose for a sixth straight day, on the verge of crossing another key threshold amid a deepening selloff across global debt markets.
The 30-year rate increased to 5.58% on Tuesday, within 1 basis point of a level last seen in 2002, in the wake of the dot-com bust. The latest leg higher came as elevated energy prices added to inflationary pressures and corporate new issues weighed on the market.
It stands to be the latest in a series of milestones for the $32 trillion Treasuries market, which is in the throes of a months-long selloff. Government debt has been flailing around the world as elevated oil prices — tied to the war in the Middle East — ripple through the global economy, pushing investors to bet central banks including the Federal Reserve will further raise interest rates.
In the US, surging business activity and concern about government debt levels have provided additional momentum to what's become the biggest Treasury selloff since Trump's April 2025 tariff rollout sent markets into a tailspin.
Strategists at Citigroup Inc. say the Treasury market is going through a "light buyer's strike." Meanwhile, Yardeni Research says an unwind of the yen-funded carry trade — a strategy that involves borrowing in the Japanese currency and investing in assets that offer higher returns — is helping fuel the selloff.
But some, like Wall Street veteran Jim Bianco, see an opportunity in the chaos. He is turning bullish on Treasuries for the first time in six years, while long-time bond investor Chris Iggo said bonds are set for a rebound after four difficult years. RBC BlueBay Asset Management CIO Mark Dowding said the selloff in the global bond market has been overdone.
Treasuries have lost 2.6% so far this year, a Bloomberg gauge shows, compared with a 6.3% gain last year. And the selloff has hit debt across maturities, with the 10-year yield, at 5.24%, trading at its highest since 2007. Two-year yields are at about 4.9%, the last major maturity to linger below 5%.
Seasonal Pressure
This time of year also tends to be difficult for bonds. Over the past decade, Treasuries have posted a median loss of 0.9% in September, followed by 0.7% in October, data compiled by Bloomberg show. And while this month is already shaping up to be the worst September since 2023, the ongoing US-Iran war, fiscal concerns and a hawkish Fed are raising the risk that losses will extend into October.
"It's been a train wreck in rates over September, and the pain trade may continue," said Prashant Newnaha, strategist at TD Securities. "As long as there is no Middle East resolution, there is a risk that we see ongoing de-risking in fixed income and it could spread to equities as well."
The "seasonal test" for Treasuries typically comes in October, as bond supply ramps up and investors return from the summer lull, said Masahiko Loo, senior fixed-income strategist at State Street Investment Management.
"Going into Thanksgiving, the combination of renewed Treasury supply, heavy credit issuance and relentless AI capex demand suggests competition for capital remains intense, keeping the risk of further Treasury volatility elevated," said Loo.
--With assistance from Ruth Carson and Masaki Kondo.
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