The yield on the 10-year U.S. Treasury note rose more than 3 basis points Tuesday to 4.79%. Driven higher by concerns over the latest flare-up in the war against Iran and its effects on fuel costs and inflation, the yield touched its highest level since January 2025 in trading during the day.
The continuing bond selloff has driven up government borrowing costs around the world. Eshe Nelson of The New York Times noted today that Japan is seeing 10-year yields above 3% for the first time in 30 years and Germany now has the highest 10-year rates since 2011 (see the Times’s chart below).
“A combination of factors are prompting investors to demand higher returns to hold government debt: a flood of borrowing by the world’s richest nations, expanding budget deficits, persistent inflation and few signs that countries are able or willing to take steps to improve these conditions,” Nelson wrote.
Ulrike Hoffmann-Burchardi, chief investment officer of the Americas at UBS, said she expects to continue to see heightened volatility in the bond market. “With no clear path to reopening the Strait after six months of war, inflation worries remain elevated,” she said in a note, per CNBC. “Uncertainty over the Federal Reserve’s policy outlook, fiscal concerns, and rising AI-related debt issuance have all kept bonds under pressure.”
Ed Al-Hussainy, a portfolio manager at Columbia Threadneedle, told the Times that it’s difficult to “disentangle” the causes of the rate surge. “The only thing we can say right now is that they’re all pointing in the same direction,” he said, “and that’s in the direction of higher rates, and they’re doing it globally.”
