Treasury Yields Keep Climbing as Bond Selloff Deepens and Inflation Worries Bite

Bloomberg, CNBC, and Reuters contributed to this report.

US Treasury yields kept moving higher on Tuesday as investors kept dumping bonds and bracing for inflation to stay hotter than expected.

The biggest pressure is at the long end. The 30-year Treasury yield rose 3 basis points to 5.181%, its highest level since October 2023. The 10-year note, the key benchmark for mortgages and other borrowing costs, climbed nearly 4 basis points to 4.659%, the highest since January 2025. The 2-year yield also edged up, to 4.10%. Since bond prices move opposite to yields, that means Treasurys were under more selling pressure again.

Oil is still doing a lot of the damage. Last week’s jump in energy prices tied to the US-Iran conflict showed up in fresh inflation data, and that was enough to spook fixed-income traders. The market has started leaning toward a world where the Federal Reserve may have to keep rates high for longer, or even move them up again if inflation refuses to cool.

Mohit Kumar, chief economist and strategist at Jefferies, said the bond market is being squeezed by a mix of forces: stubborn inflation, wider government deficits, and political uncertainty in places like the UK He said even if there is a Middle East deal, oil probably will not snap back to pre-war levels.

That matters because energy prices feed straight into the inflation outlook. Brent crude was down a bit on Tuesday at $110.38 a barrel, while US West Texas Intermediate was little changed at $108.67.

The deficit story is adding another layer of pressure. Kumar said governments are likely to step in with fuel subsidies for households, and that means more borrowing and more strain on long-term yields. In his view, the market is getting ahead of itself by pricing in rate hikes, even though growth is likely to slow as prices rise.

Wall Street is paying attention. A Bank of America survey released Tuesday found that 62% of global fund managers expect 30-year Treasury yields to hit 6% at some point, which would be the highest level since the late 1990s. Only a small slice of respondents saw a return to 4%.

The pressure is not limited to the US Germany, the UK and Japan are also seeing long-dated yields stay elevated. Japan’s 30-year yield even hit a record this week.

That is the part investors are watching closely. Higher yields can weigh on stocks, raise borrowing costs for consumers and companies, and make the recent rally in equities harder to sustain. For now, the bond market is sending a blunt message: inflation is not out of the picture yet, and buyers want more compensation for taking long-term risk.