US 10-Year Treasury Yields Surge Toward 5% Amid Global Bond Sell-Off

A global bond sell-off has pushed US 10-year Treasury yields to within shouting distance of 5%, as investors grow concerned about a sharp rise in oil prices, renewed inflation risks, and the likelihood of an interest-rate hike by the Federal Reserve.

The yield on 10-year US Treasury bonds rose to 4.97% at the start of the Asian trading session, its highest level since late 2023 and nearly at the threshold prompting investors to prepare for a possible break above 5%. This was driven by higher oil prices, growing inflation concerns, tougher central-bank rhetoric, and persistent worries about budget deficits.

Mansoor Mohi-uddin, chief macro strategist at the Bank of Singapore, warned that we are seeing a 'perfect combination of factors' pushing global yields higher. If US consumer-price data released later on Friday prove strong, the 10-year bond yield could rise above 5% according to Mohi-uddin.

The selloff spread to Asian debt markets with the yield on Australia's three-year government bonds jumping 18 basis points to 5.047%, its highest level in 15 years, and the yield on 10-year Japanese government bonds rose 6 basis points to 2.97%. This is expected to increase borrowing costs for households, companies, and local governments.