Bond Market Rout Intensifies as US Treasury Yields Reach Multi-Decade Highs

The global bond market has experienced a selloff, pushing borrowing costs higher and intensifying concerns over inflation. The US Treasury yield for the 30-year bond reached its highest level since 2004, climbing to 5.5016% on Thursday before easing from its peak. This move extended a bond rout that intensified after stronger-than-expected US business activity data revived inflation concerns.

The benchmark 10-year Treasury yield rose to 5.1751% on Friday, its highest level since 2007, while Japan's 10-year government bond yield reached 3.115%, its highest since 1996. The selloff also spread across global debt markets, with Australian 10-year yields climbing.

The higher US Treasury yields have pushed up borrowing costs globally and threaten to put pressure on equity valuations. Oil prices have added to inflation concerns, with Brent crude around $105 a barrel on Friday. Markets are now pricing a greater chance of another Fed rate increase as soon as next month, with about a 73% probability indicated by Fed funds futures.