The 30-year U.S. Treasury yield soared past 5.5%, hitting a new high since 2004

The 30-year U.S. Treasury yield soared past 5.5%, hitting a new high since 2004. (Reuters)

[Financial Channel/Comprehensive Report] U.S. government bond yields continue to surge, and market expectations for the Federal Reserve to raise interest rates again have increased. On Thursday (24th), the 30-year U.S. Treasury bond yield once rose to 5.501%, the highest level since June 2004; the 10-year U.S. bond yield, which is linked to mortgage rates, also rose by more than 10 basis points to 5.223%, setting a new high since June 2007.

Short-term Treasury yields also rose, with the 2-year U.S. Treasury yield rising more than 4 basis points to 4.941%. One basis point is 0.01%, and bond yields and prices usually move in opposite directions.

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CNBC reported that while U.S. debt was being sold off, global bond markets were also under pressure. Japan's 10-year government bond yields rose to their highest level since August 1996, British government bond and German government bond yields also rose, and various European government bond yields hit multi-year highs.

Thursday's sharp move extended the previous day's losses in U.S. Treasuries. The 10-year U.S. Treasury yield posted its biggest one-day rise on Wednesday since April 7, 2025, as traders reacted to stronger-than-expected U.S. economic data, hawkish comments from Federal Reserve officials, and high oil prices.

Mike Saunders, head of fixed income at Madison Investment Company, said that the intersection of fiscal, economic, geopolitical and supply inflation pressures has brought the bond market into "less familiar territory." The recent rise in yields can no longer be simply attributed to market concerns about deficits.

As relevant data and conversations with Fed officials intensified market expectations for further interest rate hikes, traders had predicted that the chance of another interest rate hike at the October meeting of the Federal Open Market Committee (FOMC) had exceeded 75%, according to CME Group's FedWatch tool, compared with about 49% a week ago.

Sanders further said that as the market expects the Fed to raise interest rates four times next year, the Fed is facing pressure to tighten policy as the risk of policy mistakes continues to increase.

Federal Reserve Governor Michael Barr said in a speech on Wednesday that "further policy adjustments" may be needed to bring inflation down to target levels. New York Federal Reserve President John Williams said in London on Thursday that it was "reasonable" to expect the Fed to raise interest rates again before the end of the year.

As U.S. bond yields continue to rise, market focus is also focused on the Federal Reserve's subsequent interest rate policy, as well as the impact of economic data, oil prices and inflationary pressure on the bond market.

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