US Treasury yields surged to new cycle highs, reflecting a challenging week for global bonds as rising oil prices and persistent inflation fears deterred investors from buying longer-duration debt at discounted prices [1][2]. According to Societe Generale’s Kenneth Broux, both US Treasuries and German Bunds have repeatedly broken into higher yield ranges throughout September, with projections for the US 10-year yield at 5.24% and 5.36%, and Bund yields at 3.70% to 3.74% [1]. On Monday, the 10-year US Treasury note yield rose more than 2 basis points to 5.2087%, while the 30-year Treasury bond yield increased by 1 basis point to 5.5162%. The 2-year Treasury note yield climbed over 4 basis points to 4.9056% [2]. German 10-year Bund yields held steady at 3.6277%, and UK Gilts rose 4 basis points to 5.4099% [2].
The bond market's volatility was underscored by the 10-year US Treasury yield reaching its highest level since June 2007 last Thursday, and the 30-year bond yield hitting levels not seen since 2004 [2]. Higher oil prices, with West Texas Intermediate futures up nearly 2% to $94.19 a barrel, contributed to inflation concerns and further pressured global government bonds [2]. Societe Generale notes that technical levels are stretched, and there is little incentive for investors to buy debt until the current pattern breaks down [1]. Relief for the bond market may depend on month and quarter-end portfolio rebalancing, as well as upcoming US PCE and Eurozone CPI data releases [1].
Investors are closely watching a series of upcoming US economic data releases, including the monthly nonfarm payrolls, unemployment rate, core PCE index, and quarterly GDP growth print. The August JOLTS report, expected Tuesday, is forecast to show job openings dipping slightly to 7.24 million from 7.27 million in July [2].
Overall, both sources highlight the impact of rising oil prices and sticky inflation on global bond yields, with market participants remaining cautious and alert to forthcoming economic indicators [1][2].
CONCLUSION
US Treasury yields have reached new highs, driven by inflation fears and rising oil prices, with investors awaiting key economic data for potential relief. The market remains volatile, and sentiment is negative as buyers hold back amid stretched technical levels and uncertainty. Upcoming US and Eurozone data releases will be crucial in determining the direction of yields and investor appetite.