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