Fed Rate Hike Concerns Push 30-Year U.S. Treasury Yield to Highest in 22 Years

10-Year Yield Hits 5.22%, Highest Since 2007

Market Prices In 70% Chance of Another Rate Hike in October

Treasury Sell-Off Drives Up Japanese and German Bond Yields

As the possibility of an additional interest rate hike by the U.S. Federal Reserve (Fed) grows, yields on U.S. Treasury bonds are soaring day after day. The yield on the 30-year Treasury has reached its highest level since 2004, and the yield on the 10-year Treasury, which serves as a benchmark for global long-term interest rates, climbed to its highest point in 19 years.

According to U.S. financial media outlet CNBC and others on September 24 (local time), the yield on the U.S. 30-year Treasury rose to as high as 5.501% after the close of trading in New York that day. This marks the highest level since 2004.

The yield on the 10-year Treasury also climbed to 5.22%, hitting its highest level since June 2007, while the yield on the 2-year Treasury, which is relatively sensitive to changes in monetary policy, rose to 4.94%.

The selloff in U.S. Treasuries continued for the second day in a row. The previous day, the 10-year Treasury yield logged its biggest one-day increase since April 7 of last year, as a combination of better-than-expected economic indicators, hawkish comments from Fed officials, and rising international oil prices all contributed to the surge.

In the market, expectations are strengthening for additional interest rate hikes by the Fed. On September 16, the Fed raised its benchmark rate by 0.25 percentage points. According to the CME FedWatch Tool, the interest rate futures market is currently pricing in roughly a 70% chance of an additional rate hike at next month's Federal Open Market Committee (FOMC) meeting, significantly higher than the approximately 49% probability just one week ago.

The rise in long-term rates is also increasing the borrowing burden on households. The interest rate on a 30-year fixed-rate mortgage in the U.S. recently surpassed 7%. According to Freddie Mac, the average rate stood at 7.03% as of September 24. Compared to the beginning of the year, when rates hovered near 6%, this represents a substantial increase in the monthly repayment burden for homebuyers.

The selloff in Treasuries is also spreading to major sovereign bond markets. The yield on Japan's 10-year government bond rose to near 3.1%, hitting its highest level since August 1996, while the yield on Germany's 10-year bond jumped to around 3.6%, reaching its highest point since 2009.

This content was produced with the assistance of AI translation services.