Bond Market Selloff Pushes US Long-Term Borrowing Costs to 22-Year High

The global bond market is experiencing a selloff, driving up long-term borrowing costs in the US. The yield on the 30-year US Treasury reached its highest level since 2004, climbing to just above 5.50 percent. This rise in yields has also affected consumers, with 30-year mortgage rates increasing by about one percentage point since the war began and now standing at around seven percent.

Experts attribute this surge to strong economic growth, mounting public debt, and rising energy prices. US business activity data indicated strong growth and rising inflation pressures, prompting investors to bet on further Federal Reserve interest rate hikes.

The selloff is not limited to the US. Germany's finance agency expects federal borrowing to reach a record 525.5 billion euros in 2026, with yields on benchmark 10-year bonds briefly exceeding 3.5 percent this month, their highest level in 17 years. Japan's 10-year bond yield also reached its highest level since 1996.

Despite Treasury Secretary Scott Bessent's efforts to contain borrowing costs through interventions and buybacks, yields have continued to climb. Experts warn that the rise in yields may limit economic growth and increase debt burden for governments and consumers.