The 10-year Treasury yield climbed to 4.78% on Tuesday, up from 4.75% late Monday and the highest since January 2025, CBS News reported. That number sets the tone for mortgage rates, so the move reaches well past traders. The 2-year yield rose to 4.37% from 4.34%, and the 30-year hovered around 5.25%.
The selling is global. A key Bloomberg gauge of bond yields hit 3.72%, its highest since June 2008. Investors are dumping government bonds because inflation stays high and government debt worries them, and they want more yield to cover the risk. Bond prices and yields move in opposite directions, so every sale pushes yields up.
James Reilly, a senior markets economist at Capital Economics, laid out the causes in a research note: “Fiscal concerns, rising energy prices and AI-related investment have lifted long-term government bond yields across major economies to multi-decade highs.” He did not expect a quick reversal. Unlike earlier sell-offs, he wrote, this one has no obvious and fixable cause.
Energy is part of it. The U.S. launched military action against Iran over the weekend and oil prices spiked. The war is in its seventh month. Morningstar said the latest flare-up has raised fears that central banks will hike rates to fight inflation from higher energy costs.
The Federal Reserve is the other pressure point. Chairman Kevin Warsh spoke at the central bank’s annual conference in Wyoming last week and suggested the Fed could raise rates if inflation does not subside. The Fed meets Sept. 15-16. Traders put a 66% chance on a September hike, according to CME Group’s FedWatch tool.
What it costs
Treasury yields feed into what people pay for car loans, credit cards, personal loans and mortgages. The average 30-year mortgage rate tends to track the 10-year yield. Higher borrowing costs also tend to weigh on stock prices and make it harder for businesses to expand. Savers with high-yield accounts and CDs come out ahead.
Ulrike Hoffmann-Burchardi, chief investment officer of the Americas at UBS Global Wealth Management, expects yield swings to continue for now and fade toward year-end. She projects the 30-year and 10-year yields will finish the year at 5% and 4.5%.
