The 30-year US Treasury yield reached 5.12%, its highest level since 2007. Across the G7, government bond yields climbed to their highest since 2004 and pushed toward 5%. The picture comes from a market commentary published in mid-May 2026.
The commentary blamed two forces: inflation fed by the war, and the prolonged closure of the Strait of Hormuz. JPMorgan chief executive Jamie Dimon had warned a month earlier that the United States was heading for “some kind of bond crisis.” Axios then ran a note titled “The Great Bond Freakout.” The writer said a Trump-Xi summit in Beijing produced no progress on Iran, and that this sped up the selloff.
What higher yields do to households
When governments pay more to borrow, the cost spreads. Higher yields feed straight into mortgage rates, vehicle finance and corporate debt, the commentary said, and that tightens financial conditions across the economy. It also complicates life for the Federal Reserve. Kevin Warsh, the incoming Fed chair, may find it hard to cut rates despite political pressure, the writer argued. Treasury Secretary Scott Bessent’s pledge to lower borrowing costs is getting harder to keep.
The selloff is not only about war, he added. Governments continue to run large deficits and issue heavy volumes of debt, a pattern known as fiscal dominance. Deglobalisation and geopolitical fragmentation are making investors demand higher compensation for risk. Those forces are likely to last, keeping upward pressure on yields.
The climb began months earlier
Yields were already moving in January. The 10-year Treasury yield rose from 3.95% in October 2025 to nearly 4.3% in a single week, according to a brief on commercial real estate that cited Globe St. Investors, it said, were uneasy about inflation and unpredictable US policy, and some were selling American assets. Tariff threats tied to the US campaign over Greenland added to the pressure. For commercial real estate, the result was more expensive borrowing.
The same brief said the Federal Reserve’s stance looked less dovish and economic data remained solid, so the bond market expected yields to stay higher for longer.
Sources
- Bond Yields Hit Multi-Decade Highs Amid Global Economic Uncertainty | André Hamersma posted on the topic | LinkedIn
- Bond Yields Surge Amid US Selloff
