U.S. 20-Year and 30-Year Treasury Yields Hit 24-Year Highs
The yields on U.S. 20-year and 30-year Treasury bonds reached approximately 5.69% and 5.64% during trading, marking the highest levels in about 24 years, continuing the sell-off at the long end.
The official constant maturity yields closed on September 29 at 5.64% for the 20-year and 5.59% for the 30-year. According to Dow Jones data, the 30-year yield settled at approximately 5.638% on September 30, the highest since June 7, 2002. The 10-year yield rose to about 5.29%, also returning to levels near the 2002 highs. The 2-year yield is around 4.89%, with the steepness of the curve primarily driven by long-end term premiums rather than a collapse at the short end. Prices and yields move inversely, and long bond prices continue to decline.
Driving factors include inflation expectations, fiscal supply, and policy paths. After the Federal Open Market Committee raised rates by 25 basis points this month in a 12-0 vote, the Chicago Mercantile Exchange's federal funds futures indicate a probability of over 72% for another rate hike in October. Brent crude oil spent most of September above $100 per barrel, settling around $102. The total U.S. national debt surpassed $40 trillion last month, with interest payments accounting for about 3.1% of GDP, the highest since the early 1990s. Treasury Secretary Scott Bessent expanded the 10-30 year buyback in mid-August when the 30-year yield was about 5.2%, which has since continued to rise. The proportion held by foreign officials has decreased from about 15% three years ago to around 13%, while investment funds' share has increased to about 67%. Corporate bond issuance is up about 50% to 100% year-on-year, competing for long-term funding with Treasuries.
The 30-year mortgage rate has reached about 7%. Japan's 10-year government bond yield has risen to its highest level since 1996, while UK and German bonds have also hit multi-year highs. The unwinding of yen carry trades is noted as an additional disturbance. Bond strategies indicate that most of the increase since March has come from adjustments in the federal funds path, with the remainder stemming from growth expectations and oil prices.
Funds are selling long-term Treasuries and buying higher coupon or shorter-duration bonds. Buyers are demanding more term premium to lock in 30-year bonds, while sellers include the Treasury, which must continue to auction, and leveraged accounts that are stop-lossing. The events are driven by supply, inflation, and rate hike expectations, not just a single data point. Beneficiaries are coupon buyers of newly issued bonds and floating-rate assets; pressured parties include holders of existing long bonds, mortgage borrowers, and equity valuations reliant on low discount rates. The buyback scale has not yet reversed the long end of the curve.
Source: Public Information
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The peak for the 30-year yield in June 2002 occurred at the tail end of the recession following the tech bubble, after which the Federal Reserve brought policy rates close to zero and suspended 30-year issuances from 2002 to 2006. The peak in 2026 coincides with the restart of rate hikes, the Iran war pushing oil prices higher, the national debt exceeding $40 trillion, and the competition for bonds from AI capital expenditures. Bessent's attempt to suppress the long end through buybacks has been met with a market response of higher term premiums: the supply is too large, and the proportion of official buyers is decreasing.
Capital is shifting from older bonds with rising prices to newly issued high-coupon bonds. Foreign central banks are buying less, and domestic funds must absorb a larger share, thus requiring higher yields to lock in 30-year bonds. Corporate bond issuance has surged over 50%, competing for the same long-duration accounts as Treasuries. The motivation is not to bet on a recession but to reprice for sticky inflation and fiscal paths. Resources are shifting from short-end policy rate expectations to who will absorb the next round of auctions at the long end.
In contrast to the 1979-1981 Volcker rate hikes that pushed the 30-year yield above 15%, the steepness observed after the taper tantrum in 2013 and the inflation peak in 2022 is notable. The current situation resembles a supply shock combined with term premiums, rather than a mere adjustment of policy rates. The industry phase reflects a synchronized global bond sell-off: Japanese, Cambodian, and German bonds are all hitting multi-year highs, with the U.S. long end setting the global price. Control does not lie in buyback statements but in whether auctions can be digested by private accounts.
Essentially, the pricing power is shifting. The risk-free rate is no longer solely determined by the central bank's short end but is jointly decided by fiscal supply, oil prices, and who is still willing to be the last buyer. The mechanism is that debt interest as a share of the economy is returning to 1990s levels, official buyers are exiting, and private accounts are using term premiums to hedge against uncertain inflation and war premiums. Once the discount rate is pinned around 5.6%, assets supported by low rates will need to recalculate their net values. Buybacks are purchasing time but cannot reclaim the $40 trillion curve.
ABAB News · Cognitive Laws
The short end listens to the central bank, while the long end listens to supply and inflation.
Buybacks cannot suppress a curve that must continue to auction.
Rising term premiums equate to a new price for fiscal policy.