The 30‑year Treasury yield nudged up 5 basis points to 5.53% on Thursday, setting the highest level since 2004 and eclipsing the 5% peak it hit earlier in July. This jump follows the University of Michigan’s consumer‑sentiment gauge, which, despite falling to a four‑month low, outperformed economists’ forecasts, according to RBC Capital Markets’ Izaac Brook.
The 10‑year note mirrored the trend, leaping to 5.22%—the first time it surpassed 5.20% this year—while the two‑year fell 7 basis points, underscoring a disconnect between short‑term and long‑term rates. SMBC Group’s Monty Gandhi noted that short‑term investors are positioning for a “higher‑for‑longer” scenario, pushing yields further apart.
Oil prices slipped 2.3% to $92.41 a barrel, yet Treasury yields rose, revealing no clear upper bound on Fed hikes. Citigroup economist Andrew Hollenhorst highlighted that rate increases are now being priced in response to energy‑driven inflation, a view echoed by Morgan Stanley’s updated Treasury‑yield forecast.
The yield curve widened dramatically: the 2‑to‑10‑year spread widened from a near‑one‑year low, and the 5‑to‑30‑year spread rebounded after falling below 2000 levels earlier in the week. This rebalancing signals a shift toward longer‑dated debt as markets anticipate sustained tightening.
Treasury futures saw sharp activity, with block trades of five‑year notes and Ultra Bond contracts executed near 10 a.m. New York time, suggesting traders are locking in positions amid heightened volatility. Looking ahead, the market expects further Fed rate hikes, persistent oil price swings, and a surge in Treasury volatility as investors navigate the new yield‑curve landscape.