US Treasury Yields Climb to 24-Year High Amid Inflation Concerns

US Treasury yields have soared to their highest levels in over two decades, with the 10-year yield reaching 5.34% and the 30-year yield climbing to 5.70%. This marks the first time since 2002 that yields have hit these heights. The surge was driven by a combination of strong economic growth, rising investment in artificial intelligence, and persistent inflation pressures, which triggered a selloff in government bonds.

The Institute for Supply Management's services purchasing managers index showed a prices-paid index of 74.0, the highest since July 2022. This data further fueled concerns about inflation, contributing to the bond market selloff.

Markets are currently pricing in a 25% chance of a Federal Reserve benchmark interest rate hike in October. By December, traders are fully expecting a 25-basis-point increase. These expectations reflect ongoing uncertainty about the Fed's next moves in managing inflation and economic growth.