US 30-year yields hit highest level since 2007 as war, oil worries fester

Yields at multi-year highs

US long-term Treasury yields climbed to their highest level in nearly two decades on Tuesday, as stalled talks to end the US-Iran war and fears of imminent escalation pushed oil prices higher and fanned inflation worries, according to The Star. The yield on the 30-year bond touched 5.321% in Asian hours, the highest level in 19 years, while the benchmark 10-year yield rose to as much as 4.735% before settling at 4.729%, the outlet reported.

The Financial Express reported that the 30-year yield touched 5.33%, a level initially seen in 2002, with the 20-year Treasury at a post-2006 high and the 10-year yield above 4.7%. The two outlets gave slightly different peaks for the 30-year yield—5.321% versus 5.33%—reflecting different reporting windows, but both framed the move as the highest in nearly two decades.

The surge extended well beyond the US. Japan's benchmark 10-year government bond yield rose to a 30-year peak, Germany's 10-year Bund yield touched its highest level since May 2011, and France's 10-year yields hit a 17-year high, The Star reported. The Financial Express noted that bond yields in the UK, France, Italy, Germany, and Japan were among those at new highs.

War, oil, and the inflation calculus

At the center of the yield spike is the US-Iran conflict. The Star reported that Iran has said it would shift to a "fully offensive" military posture because efforts to negotiate a permanent end to the war have stalled, as Washington ruled out extending the June ceasefire agreement. The Financial Express likewise placed the US-Iran war and the blockage of the Strait of Hormuz at the heart of the factors pushing yields higher, noting that oil continues to trade above $91.

The connection to inflation is direct: higher oil prices feed into price pressures, complicating the Federal Reserve's policy path. Nigel Green, CEO of deVere Group, told The Financial Express that "every dollar added to the oil price makes the inflation argument harder for the Federal Reserve and easier for the bond vigilantes." He added that a central bank trying to cut into an inflation backdrop that refuses to cooperate is one that loses credibility with the people buying its government's debt.

The Star cited recent US consumer price index data as showing inflationary concerns are falling but remain untamed, and noted that July's inflation data removed the possibility of a September rate hike. However, the same report noted that recent job market data indicated weakness, which may keep the Fed away from any rate hikes.

Fiscal deficits and the bond market's message

The fiscal picture is also weighing heavily. The Financial Express reported that the federal government spent $1.80 trillion more than it collected year-to-date in fiscal year 2026, with the deficit jumping to $432.3 billion in July—the highest monthly total since March 2021. Total national debt is close to $40 trillion, and debt servicing costs hit $1.17 trillion as of July 2026, representing 19% of total federal spending for the fiscal year.

Anthony Saglimbene, chief market strategist at Ameriprise Financial, told The Star that last week's Treasury auctions were a reminder that the landscape is shifting, and that investors are increasingly focused on the growing amount of US debt and the country's lack of fiscal discipline.

Vasu Menon, managing director of investment strategy at OCBC, cited competition for capital from AI hyperscalers, the rising US budget deficit, and Fed Chairman Kevin Warsh's opaque policy stance as contributing to higher yields. "Rising long U.S. bond yields is a risk that investors must bear in mind going forward," Menon said, suggesting bond investors focus on shorter-duration bonds to manage that risk.

The Financial Express quoted Nigel Green as saying investors are no longer taking it on faith that spending will be brought under control, and are pricing the risk that it doesn't. The $160.7 trillion global bond market is sending a "loud signal," the outlet said, with something investors have brushed aside now too big to ignore.

Auctions and the global selloff

The Treasury's recent auctions have also drawn attention. The Star reported that the sale of 10-year notes cleared at a high yield of 4.683%, the highest in 19 years, while the 30-year bond auction stopped at 5.216%, a 25-year peak. The Financial Express noted a subsequent move: the 10-year yield decreased to 4.65% on Wednesday following the Treasury's announcement to double the size of buybacks on long-dated securities.

Analysts quoted in both reports pointed to a mix of war-related supply concerns, fiscal profligacy, and central bank policy uncertainty as the drivers of the global bond selloff. The Financial Express described the situation as a "wave of selling" that is hammering prices down and sending yields higher, with consequences for equity investors, gold investors, and borrowers alike.

Perspectives

Bond investors and strategists

Vasu Menon of OCBC emphasizes that rising long US bond yields are a key risk, and advises investors to focus on shorter-duration bonds to manage that risk. He attributes the yield surge to AI capital competition, the budget deficit, and Fed policy opacity.

Market strategists

Anthony Saglimbene of Ameriprise Financial sees the Treasury auctions as a signal that the landscape is shifting, with investors increasingly worried about US debt and fiscal discipline.

deVere Group CEO

Nigel Green warns that higher oil prices make the Fed's inflation fight harder, and that investors are pricing in the risk that US spending will not be brought under control, undermining confidence in US debt.