30-year Treasury yields surge to levels last seen in 2007 amid rising commodity prices and Fed rate hike expectations.
US Treasury yields extended a multi-month climb this week, with the 30-year yield reaching its highest level since 2007. The move follows a 76 basis point rise in the two-year yield since early March, driven by inflationary pressures from higher energy and commodity prices.
Markets now price a 63% chance of a September Federal Reserve rate hike, according to CME FedWatch. The bond sell-off coincides with geopolitical tensions, including the Iran conflict and disruptions in the Strait of Hormuz, which have pushed oil prices above $85 a barrel.
For the first time since 2019, government bonds now offer higher returns than crypto carry trades, per Glassnode data. The two-year yield has shown a correlation of 0.44 with crude oil prices since March, underscoring the link between energy markets and fixed income.