The sell-off in long-dated government bonds intensified as the US 30-year Treasury yield rose to 5.16%, up 4 basis points on the day and the highest level since October 2023. The 10-year yield reached 4.63%, while the 2-year climbed to 4.10%, both marking their highest levels since February 2025. Traders had long treated 5% on the 30-year as a line where buyers would likely step in. That support did not show up this time.
Inflation fears and higher oil prices drove the move
The latest rise in yields came as inflation worries strengthened again. The report said Trump continued pressing Iran to reach an agreement to end the war, helping extend gains in oil prices and lifting inflation expectations. Recent US data had already unsettled the bond market. April CPI rose 3.8% year over year, the highest since May 2023, and PPI increased 6%, double Wall Street expectations. The message from the numbers was direct: inflation pressure had not eased.
That has kept the long end of the curve under particular strain. With the Federal Reserve holding rates steady and rate-cut expectations pushed farther out, higher energy prices added another source of pressure on duration-heavy assets.
Japan's 30-year yield jumped to 4.2%
The move was not limited to the US. Japan's 30-year government bond yield surged 20 basis points to 4.2%, setting a new record high since the bond was first issued in 1999. Long-dated yields in the US and Japan rising together is unusual, and it reflects a broader market shift in how inflation is being priced.
The Bank of Japan ended its negative rate policy last year and has been moving rates higher step by step, but the speed of this latest jump still exceeded expectations. Japan is also one of the largest holders of US Treasuries. As domestic yields rise, Japanese institutions may find local bonds more attractive, which could reduce demand for US debt and add cross-market selling pressure.
BNP Paribas sees little anchoring above 5%
Guneet Dhingra, head of US rates strategy at BNP Paribas, said that “above 5%, there is no anchor point.” He pointed to a 5.25% to 5.5% trading range for the US 30-year yield, suggesting the market may keep searching for a new level before selling pressure fades.
That view cuts against the older assumption that 5% would trigger strong institutional buying. Over the past few weeks, yields have held above that threshold and kept moving higher, leaving global bond markets with little room to relax.