Dollar Surges to 17-Month High as Global Bond Yields Soar

The US dollar surged to a 17-month high against the euro on Thursday, driven by a global bond selloff that pushed US and European government yields to fresh highs. The sell-off was fueled by concerns about fiscal policy, particularly in France, where bond markets have been weak, as well as continued worries about energy prices and inflation.

According to Brian Daingerfield, head of G10 FX strategy at NatWest Markets, higher yields have been driven by a confluence of factors, including concern about fiscal policy and continued central bank tightening. 'There's market expectations for continued tightening from central banks, which includes the Federal Reserve,' he said.

The yield on benchmark US 10-year notes hit its highest level since 2002, reaching 5.237%. The euro sank against the yen and Swiss franc, and barely held in positive territory against the pound. French debt yields surged to a 14-year high, while German debt came under fire.

The dollar clocked its sixth straight quarter of gains against a basket of currencies by the end of September, its longest such stretch since 2022. The dollar index was last up 0.51% on the day, after hitting its highest level since April 2025.