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Long‑Term U.S. Yields Surge Toward 5% and Tighten Borrowing Costs

Higher oil plus geopolitical tensions could extend a repricing of long-term yields ahead of ECB and Fed decisions

U.S. dollar, Euro, Yen and Pound banknotes are seen in this illustration taken May 4, 2025. REUTERS/Dado Ruvic/Illustration
A trader works on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., August 24, 2026. REUTERS/Brendan McDermid
US 10-year Treasury yield nears 5% as bond selloff raises stock market risks. (Pexel/Representative image)
Image

Overview

  • The 10-year Treasury yield traded around 4.8% on Tuesday while the 30-year yield hovered near 5.27%, levels not seen in years that have pushed benchmark borrowing costs higher.
  • Investors pointed to rising U.S.–Iran tensions and Brent crude approaching $99–$100 per barrel as immediate forces raising inflation risks and lifting long-term yields.
  • Market strategists said a rising term premium is also at work as heavy Treasury supply and a shift from official buyers to price‑sensitive private funds have left long bonds more exposed.
  • Higher long-end yields are translating into more expensive mortgages and corporate borrowing, and dealmakers report slower, lower-priced mergers and refinancing activity.
  • Traders are focused on upcoming ECB and Fed meetings and near-term inflation data, with futures implying about a 59% chance of another Fed hike and PPI/CPI seen as key for whether yields stabilize.