US 30-Year Yield Hits Highest Yield in Two Decades as Iran War Reignites Inflation Fears

The US 30-year Treasury yield has surged past 5%, nearing its highest level in roughly two decades as the Iran war raises inflation fears.

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Notably, yields rose across the curve. Yesterday, the 2-year and 10-year notes each climbed more than 6 basis points. The 30-year added 5 basis points, while the 10-year hit a 9-month high.

Bond Rout Deepens as 30-Year Yield Pierces Key 5% Level

According to the Global Markets Investor, the 5% mark on the 30-year has acted as a ceiling for two years. It was tested in late 2023 and early 2025, but failed to sustain above this level both times. 

The post added that the S&P 500 pulled back whenever yields approached or exceeded 5%. A sustained break above 5% would push yields into territory unseen in nearly two decades. The 2023 peak near 5.17% sits as the next major test. 

“At 5%, government bonds become attractive enough to pull capital away from equities, while simultaneously raising borrowing costs for mortgages, corporate loans, and US government debt,” Global Markets Investor added.

The Iran conflict has accelerated the move. Higher oil prices threaten to flow through to broader inflation, forcing the Fed to stay restrictive. Markets now imply a 37% probability of a rate hike by year-end, against just 3% for a cut.

Economist Warns Higher Yields Could Trigger Debt Crisis

Economist Peter Schiff said the trajectory points to an accelerating crisis given US debt levels.

“The yield on 30-year Treasuries is above 5%, nearing the highest yield in twenty years. The move from 5% to 6% will be much quicker than the move from 4% to 5%, and the move from 6% to 7% will be quicker still. Given our sky-high debt, this move will trigger an economic crisis,” he said.

Analyst Financelot noted the 30-year yield broke out of a wedge pattern, while the 2-year approached 4%. He compared the setup to 1968, when Treasury yields doubled into a recession.

Whether bond markets force another policy reversal will hinge on how quickly inflation data reflects the energy shock.

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