Global bond yields hit multi-year highs on inflation, oil prices

Global bond yields pushed to multi-year highs on Friday, led by longer-dated U.S. Treasuries, as a run of hot inflation data and war-driven energy prices fueled bets that the Federal Reserve and other central banks may need to raise interest rates.

At 5.129%, the 30-year U.S. Treasury yield ended the week up nearly 12 basis points — a level not reached since May 2025 and within striking distance of the October 2023 peak. Ten-year Treasury yields, which set the pace for a broad range of U.S. borrowing costs, closed at 4.595% after climbing nearly 14 basis points — wrapping up their steepest weekly advance since the market upheaval triggered by President Donald Trump’s tariff announcements in April 2025, according to Bloomberg. Shorter-dated debt also sold off, with the 2-year yield adding more than 9 basis points to settle at 4.084%. As a reminder, a basis point is one-hundredth of a percentage point, and rising yields reflect falling bond prices.

Three straight days of concerning U.S. price reports fueled the selloff. In April, the consumer price index was 3.8% higher than a year earlier, the fastest pace since May 2023, mainly due to higher energy costs from the Middle East. Wholesale inflation, measured by the producer price index, reached a 6% annual rate, the highest since late 2022. Another report from the Bureau of Labor Statistics showed import prices rose 4.2% over the past year through April, the biggest jump since October 2022, also driven by higher energy costs from the regional conflict.

Oil markets pushed higher after a Trump visit to China yielded no significant trade agreements and no visible path toward resolving the Iran conflict, Reuters reported. West Texas Intermediate settled at $104.39 a barrel and Brent at $108.30.

The bond market turbulence was not confined to the U.S. According to Bloomberg, a 4% handle on Japan’s 30-year yield had not been seen since those securities first came to market in 1999. British gilts were not spared either: a political crisis threatening Prime Minister Keir Starmer’s hold on power piled onto the broader selloff, lifting 30-year gilt yields to their highest point in nearly three decades. Sovereign debt across Germany, Spain, Australia, and New Zealand also fell sharply.

December Fed rate-hike odds have risen to nearly 65%, according to Bloomberg. That outlook complicates matters for newly confirmed Fed Chair Kevin Warsh, who was confirmed by the Senate on Wednesday. Warsh built a reputation as an inflation hawk, but Trump has repeatedly pushed for rate cuts and has indicated he will press Warsh to deliver them.

Rising energy prices from the war have pushed gasoline costs to their highest since July 2022, affecting supply chains that rely on diesel transport. Real wages have fallen year-over-year for the first time since April 2023, as inflation has wiped out all gains in workers’ average hourly pay.

Subadra Rajappa, who leads research at Societe Generale Americas, captured the mood in an interview on Bloomberg Television. “Bond yields definitely feel like they are getting unhinged,” she said. “The market is not only testing the Fed, it’s putting Congress on notice. The longer that interest rates remain high, financing costs go higher.”

In a morning note, One Point BFG Wealth Partners chief investment officer Peter Boockvar argued that long-end bond yields have effectively assumed control over the direction of monetary policy. He closed with a wry wish for the new Fed chair: “I wish Kevin Warsh the best, but he will still be subject to his surrounding macro circumstances.”