Global government bond markets are in the grip of a fierce selloff, pushing borrowing costs in the US, UK and Japan to levels not seen in decades.
The US 10-year Treasury yield, the benchmark for mortgages and loans, hit 5.22% on Thursday, its highest level since 2007.
The 30-year yield touched 5.5%, a level last seen in 2004.
Yields rise as bond prices fall, so the moves reflect investors dumping government debt and demanding a higher return to hold it.
Not just a US problem
Japan's 10-year yield climbed to its highest level since August 1996.
UK gilts have been under pressure for weeks, with the 10-year yield reaching 5.295% this month, its highest since August 2007.
The 30-year gilt has hit levels not seen since the late 1990s.
Yields in Germany and elsewhere in Europe have also reached fresh multi-year highs.
Oil and inflation
The main culprit is inflation, stoked by the conflict with Iran that began in late February and has kept energy prices high.
Brent crude, the global oil benchmark, settled at $106.60 a barrel on Thursday after Houthi militants in Yemen fired missiles at Saudi Arabia.
Oil is up more than 17% in September alone.
A hawkish Fed
The Federal Reserve raised interest rates last week for the first time since 2023, lifting its benchmark to a range of 3.75% to 4%.
Most Fed officials expect at least one more increase this year.
The latest rout accelerated after survey data showed robust US business activity in September alongside hot, energy-driven inflation.
Traders now see a 71% chance of another hike in October, up from 11% a month ago.
US nominal growth ran at around 8% in the second quarter, giving policymakers little reason to ease off.
Too much debt, too few buyers
Heavy government spending adds to the strain, with investors fearing it will keep inflation elevated.
Technology companies are also issuing debt to fund AI infrastructure, competing with governments for the same investor cash.
US Treasury Secretary Scott Bessent has tried to contain long-term yields, including by expanding buybacks of 20- and 30-year debt.
The Treasury bought back roughly $4.08 billion of long-dated bonds on Thursday, with little obvious effect.
Why it matters
Higher yields feed directly into mortgages, car loans and business borrowing, making life more expensive for households and companies.
They also weigh on stock markets, pulling investors away from shares and dragging down valuations.
With inflation sticky and borrowing heavy, yields may yet have further to climb.
For now, the bond market shows little sign of calling a truce.
