US Treasury Yields Surge Past July 2007 Highs

US Treasury yields surged on Wednesday, hitting their highest level since July 2007. The 10-year yield rose to 5.135%, marking its biggest one-day move since April 7, 2025. This significant increase came after stronger-than-expected economic data, higher oil prices, and weak demand at a five-year Treasury auction drove a broad bond selloff.

The two-year Treasury yield, which is more sensitive to expectations for Federal Reserve policy, rose to 4.947%, its highest level since May 2024. The 30-year yield gained more than 10 basis points to 5.415%, reaching levels last seen in mid-2007.

S&P Global reported stronger-than-expected business activity in September, with the services purchasing managers’ index rising to 58.7 from 56.5 in August. This growth surge across both manufacturing and services was highlighted by Chris Williamson, S&P Global Market Intelligence chief business economist, who noted that input costs increased at their fastest pace in four years.

The stronger data added to expectations that the Federal Reserve could keep monetary policy tighter for longer. Traders increased their bets on another quarter-point rate increase in October, with the probability rising to 70% from 55% a day earlier, according to the CME Group’s FedWatch tool.