The bond-market selloff that has rattled Wall Street this month deepened Thursday, with the 30-year Treasury yield touching 5.50%, its highest level since 2004, and the benchmark 10-year yield climbing to roughly 5.2%, a level not seen since 2007, according to CNBC.
Traders are now pricing in a more than 75% chance that the Federal Reserve raises interest rates again at its October meeting, extending a hiking cycle that the Fed restarted this year under new Chair Kevin Warsh, whose hawkish public remarks in recent weeks have repeatedly jolted rate expectations higher.
Oil, Iran and the Inflation Squeeze
Crude oil has been a central driver of the move. Brent crude settled near $107 a barrel this week, and U.S. crude touched roughly $94.61, up sharply as diplomats meeting on the sidelines of the U.N. General Assembly made little visible progress on ending the Iran conflict, per NBC News. Prices briefly pared gains on reports that U.S. and Iranian negotiators were exploring a phased path that could eventually reopen the Strait of Hormuz, though that report remained unconfirmed. The rise in energy costs has pushed diesel prices up roughly 73% and gasoline up about 50% since fighting began in February, adding a fresh inflationary impulse just as the Fed weighs further tightening.
The higher borrowing costs are spilling directly into consumer markets: 30-year mortgage rates have climbed to roughly 7.37%, their highest since May 2024, squeezing an already sluggish housing market.
Treasury Secretary Scott Bessent moved to steady the market Thursday, conducting a second $4 billion buyback of longer-dated government bonds this week. Bessent argued the intervention reflected underlying strength rather than distress, telling reporters:
The U.S. bond market is still the best performing in the world.
Treasury Secretary Scott Bessent
Yields kept climbing regardless, and the selloff is not confined to the United States: Japan's 10-year yield has hit a 22-year high of its own, and German bund yields have reached levels last seen in 2009, suggesting investors globally are recalibrating for a longer stretch of elevated inflation and interest rates rather than a U.S.-specific phenomenon.
With the Fed's next policy meeting weeks away and oil prices still hostage to the outcome of Iran diplomacy, traders say the path for yields — and for mortgage and corporate borrowing costs tied to them — will likely hinge as much on geopolitical headlines as on incoming economic data.
