(Bloomberg) -- The US benchmark yield touched its highest level since 2002, the latest milestone in a monthslong selloff in global sovereign debt.
The yield on the 10-year Treasury note briefly rose above its 2007 peak to trade at 5.34% on Thursday. Earlier this week, the rate on 30-year US bonds also hit a 24-year high.
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 will further raise interest rates. Massive government borrowing and strong investment in artificial-intelligence infrastructure is adding to the demand for capital, pushing up borrowing costs.
"The rise in government bond yields is a structural long-term development," said Steven Barrow at Standard Bank. "We see the rise in yields as a process of financial markets finding their way to this 'new normal' place."
Global government bonds just posted their worst quarter since 2024, according to a Bloomberg index. The slump on Thursday sent the yield on UK 30-year bonds to 6% for the first time since 1998. Some analysts and investors say US long-dated bonds could also reach that level.
In the US, 10-year yields were up 3 basis points around 9:25 a.m. in New York. Two-year yields dipped after Minneapolis Fed President Neel Kashkari highlighted what he said was an historically high spread between two-year Treasury yields and shorter interest rates, suggesting it may be a signal from financial markets.
What Bloomberg Strategists say...
"Treasuries might look cheap against stocks, GDP and the global cycle, but on their own historical terms they have more to fall before they become oversold and ready for a durable bounce."
—Simon White, Macro Strategist, Markets Live. For the full analysis, click here.
Investors will seek clues on the US economy's health and the Federal Reserve's next steps from Friday's payroll numbers, which are forecast to have grown 85,000 in September, according to a Bloomberg poll of analysts. Ahead of those figures, the US will publish ISM manufacturing figures on Thursday.
A long list of Fed speakers is also scheduled, with six speeches lined up including Governor Chris Waller. Traders expect the Fed to deliver four more quarter-point interest-rate hikes by the end of 2027, as the world's largest economy continues to show resilience despite higher borrowing costs.
(Updates levels and adds context throughout.)
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