Treasury Yields Soar to Two-Decade Highs Amid Inflation Fears

US Treasury yields have reached two-decade highs for a seventh consecutive session, following their worst quarter since 1994. The benchmark US 10-year Treasury yield touched 5.31% on Thursday, its highest level since 2007. This surge in yields is attributed to soaring energy costs fueling inflation and the boom in AI and data centre building lifting growth expectations.

The 30-year Treasury yield topped 5.65%, its highest since 2002. Traders have scrambled to reverse expectations for US interest rate cuts this year, now anticipating at least three more Federal Reserve hikes before mid-2027.

Andrew Lilley, chief rates strategist at Barrenjoey, believes 'the end is in sight' for the Treasury bear market, but warns that other markets may face pressure from higher bond returns. European and Australian bond markets traded under pressure on Thursday.