US Treasuries Plummet to Worst Quarter Since 1994 Amid Record High Yields

The US Treasury market has experienced its worst quarter since 1994, with yields rising sharply as investors brace for higher interest rates. The benchmark 10-year Treasury yield hit a two-decade high on Thursday, reaching 5.31%, before steadying just below 5.28%. This marks the seventh straight session of record highs for US yields.

The 30-year Treasury yield topped 5.65%, its highest since 2002, as soaring energy costs and expectations for growth fueled a surge in bond prices. Higher rates have significant implications, increasing borrowing costs for companies and mortgage borrowers, while also leaving governments with less budget room for social programs.

Traders now expect at least three more Federal Reserve hikes before mid-2027, reversing earlier expectations of rate cuts this year. Chief rates strategist Andrew Lilley from Barrenjoey said 'the end is in sight' for the Treasury bear market, but noted that other markets may come under pressure from higher returns in bonds.