Energy-Driven Inflation Concerns Push U.S. Treasury Yields to Multi-Decade Highs

U.S. Treasury yields rose sharply on October 1st to multi-decade highs as energy-driven inflation concerns intensified, with the 10-year yield reaching 5.33% and the 30-year yield at 5.67%. The move extended a broader global bond selloff, with 10-year Treasury yields rising for a seventh consecutive month since 2011.

The sharp increase in energy prices remained central to the move, with Brent crude rising 0.92% to $103.53 a barrel and WTI gaining 1.16% to $90.42. The strength of energy markets was attributed to renewed scepticism about a U.S.-Iran deal soon, despite some Middle East oil flows recovering to pre-war levels.

Federal Reserve officials continued to stress that inflation remains too high, despite the softer PCE report. Minneapolis Fed President Neel Kashkari said inflation is still around 3% and that the latest data do not alter his outlook. He also warned that if rates keep rising, the pressure will fall on different parts of the economy.