US Bond Yields Soar to Record High Amid Inflation Fears and Hawkish Fed

The US long-term bond yields surged to a record high on July 29th, as investors dumped long-dated debt in anticipation of a potential rate hike by the Federal Reserve. The 30-year US Government Bonds yield jumped to 5.201%, while the 10-year Government Bonds yield rose to 4.671%. This sell-off was driven by fears of prolonged inflation and the hawkish tone adopted by some Fed officials, who voted against keeping the benchmark rate unchanged.

Three Federal Reserve Bank Presidents - Lorie Logan, Beth Hammack, and Neel Kashkari - called for a 0.25 percentage point hike and voted against holding the rate at 3.50%-3.75% annually. As a result, investors became increasingly cautious about the Fed's future policy decisions.

The spike in oil prices due to geopolitical tensions also contributed to the rise in bond yields. West Texas Intermediate jumped 6.6% to settle at $84.46 per barrel after US President Donald Trump threatened military action against Iran. The resulting inflation fears and hawkish response from the Fed led many to assess that the uptrend in long-term Government Bonds yields was strongly influenced by these factors.