US 10-year Treasury yield tops 19-month high as oil prices fuel rate-hike bets
The selloff spread across the Treasury curve. Five-year yields reached their highest level since early 2025, while 30-year yields moved above last week’s highs. Oil prices gained more than 2% after hitting session highs during US trading hours, following President Donald Trump’s threat of additional attacks on Iran.
The latest moves extend a Treasury selloff that has intensified in recent sessions as investors weigh concerns about rising government debt and assess how aggressively the Fed may need to tighten monetary policy.
Short-term Treasury yields surged on Friday after Fed Chairman Kevin Warsh, speaking at the central bank’s Jackson Hole symposium, signaled a greater possibility of interest-rate increases to contain inflation.
“The Fed is ready to act when needed,” said Sean Simko, head of fixed-income investment management at SEI Investments Corp, according to Bloomberg. He said the August employment report due Friday and consumer-price data scheduled for Sept. 11 will be key ahead of the Fed’s Sept. 16 policy decision. If employment remains stable while inflation stays elevated, the central bank could be inclined to raise rates, he added.
The 30-year Treasury yield rose about five basis points to nearly 5.26% on Monday, although it remained below the multiyear highs reached in mid-August. Longer-term yields had eased after the Treasury Department announced earlier this month that it would increase debt buybacks to support market liquidity and value.
“If Federal Reserve Chairman Kevin Warsh wanted markets to do more signaling, the message from bonds is that rates will keep powering higher this week, thanks to rising oil prices, supply and economic data,” said Alyce Andres, Bloomberg’s macro strategist.Long-dated Treasuries could receive some support from month-end bond-index rebalancing, scheduled for 4 p.m. New York time. An unusually large amount of 10- to 30-year debt issued during August is expected to be added to major benchmarks.
Still, options traders are positioning for further losses in longer-maturity Treasuries. One notable trade involved the purchase of roughly $6.5 million worth of December put options on US Treasury bond futures, with a strike level implying 30-year yields could climb to around 5.7%, compared with roughly 5.25% currently. The options expire Nov. 20.
Longer-term yields are also being pressured by expectations of heavy upcoming supply, particularly in the corporate bond market, where September is historically one of the busiest issuance months and is expected to surpass previous September totals.
