U.S. Treasury Sell-Off Eases as 30-Year Yield Eyes 1999 High

CNBC reported Tuesday that U.S. Treasury yields edged lower in early trading, offering brief relief after a sharp Monday sell-off pushed the 30-year Treasury yield toward its highest level since 1999.

The 10-year Treasury note yield fell just over one basis point to 4.6073%. The 30-year bond yield held steady near 5.1428%. The 2-year note, closely tied to Federal Reserve rate expectations, slipped more than two basis points to 4.0695%.

Monday’s Surge Sets a Troubling Benchmark

Monday’s session was bruising for bondholders. The 10-year yield briefly touched its highest point in 15 months before Tuesday’s modest pullback. A basis point equals 0.01%, and yields rise as bond prices fall.

The retreat offered limited comfort. A Bank of America global fund manager survey published Tuesday found 62% of respondents anticipate the 30-year Treasury yield will eventually reach 6%. That would mark the highest reading since late 1999, roughly 86 basis points above current levels. Only 20% of those surveyed see the yield settling back near 4%.

European Bonds Also Under Pressure

The stress is not confined to U.S. markets. Ten-year German bund yields dipped slightly to 3.1471%, though longer-dated German debt remained elevated, with the 30-year bund at 3.6836%.

British gilts continue to carry a notable premium. The 10-year gilt yield held above 5% at 5.115%, while the 30-year gilt edged higher to 5.773%. Analysts cite a combination of global inflation concerns and domestic political uncertainty for the U.K.’s persistent borrowing cost pressures.

Energy Costs and Deficits Drive the Narrative

Mohit Kumar, chief economist and strategist at Jefferies, told CNBC the dominant force across global bond markets right now is the inflationary pressure from elevated energy costs. He added that deficit concerns and U.K.-specific political strains are compounding the move.

Kumar warned that even a Middle East ceasefire deal would not return oil prices to pre-conflict levels. He projected crude could still be 25-30% higher in six months. Brent crude was last seen around $110.38 a barrel, down 1.5% on the day. U.S. West Texas Intermediate held near $108.67.

He also flagged a fiscal feedback loop. Governments subsidising household energy bills will borrow more, adding supply pressure to the long end of the yield curve. Despite the market currently pricing in rate hikes, Kumar argued that stance is not warranted. Growth is likely to slow roughly as much as inflation rises, he said.

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