U.S. Treasury yields climbed sharply on Tuesday as investors continued to offload bonds amid growing concerns that inflationary pressures are reaccelerating. The 30-year Treasury bond yield rose approximately 6 basis points to 5.198%, reaching its highest level since July 2007 — nearly 19 years ago. The surge in longer-dated yields reflects a dramatic shift in market expectations, with traders now pricing in the possibility of a Federal Reserve rate hike rather than the rate cuts that were widely anticipated at the start of the year.

The 10-year U.S. Treasury note yield, a key benchmark for mortgage rates, auto loans, and credit card debt, climbed 6 basis points to 4.687%, its highest since January 2025. Meanwhile, the 2-year Treasury note yield, which is particularly sensitive to expectations of near-term Federal Reserve interest rate moves, rose by more than 5 basis points to 4.127%. The broad-based increase across the yield curve underscores the depth of the bond selloff gripping fixed-income markets.

The move in rates follows a string of economic reports last week suggesting that inflationary pressures are reaccelerating, driven in part by rising oil prices tied to escalating conflict with Iran. The development has spooked fixed-income investors and fundamentally altered the outlook for monetary policy. Jim Lacamp, senior vice president at Morgan Stanley Wealth Management, described the situation as a real problem, noting that the consensus expectation at the start of the year was for rates to decline — a view that now appears increasingly unlikely.

Elevated borrowing costs on products such as credit cards and mortgages could weigh on consumer spending, while higher yields may also slow longer-term economic growth and put significant pressure on the elevated valuations in equity markets. Ian Lyngen, BMO’s head of U.S. rates, warned that if 30-year rates manage to reach 5.25% in the coming weeks, there would likely be a more durable pullback in equity valuations. The S&P 500 slid 0.8% on Tuesday, while the tech-heavy Nasdaq Composite pulled back 1.2%, with both benchmarks heading for their third consecutive losing session.

A Bank of America survey published Tuesday revealed that 62% of global fund manager respondents expect 30-year Treasury yields to eventually hit 6%, which would equal the highest level since late 1999 and represent an increase of roughly 85 basis points from current levels. Only 20% of respondents are targeting a 30-year yield of 4%, highlighting the bearish sentiment pervading bond markets.

The selloff is not confined to U.S. debt. Yields on longer-term government bonds in the U.K. and Germany are also elevated. The yield on German 30-year bunds stood at 3.684% on Tuesday, while Britain’s 30-year gilt yield rose less than 1 basis point to 5.773%. Japan’s 30-year yield hit a record high this week, reflecting a global trend of rising long-term borrowing costs.

Oil prices eased somewhat after President Donald Trump announced he was calling off a plan to attack Iran. West Texas Intermediate futures shed 0.4% to $103.81 per barrel in early trading, while Brent crude lost 1% to $110.96.