U.S. Treasury Yields Keep Climbing: 10-Year at 5.25%, Near 19-Year High

U.S. Treasury yields continued to rise Tuesday in Asian trading, holding near multi-year highs, as the standoff between Washington and Tehran over reopening the Strait of Hormuz keeps oil prices elevated and pressure on the Federal Reserve for further interest-rate hikes.

The 10-year yield rose 1.3 basis points to 5.254%, holding near Monday’s peak of 5.274% — the highest since June 2007, according to Tradeweb data. The 30-year yield climbed 0.2 basis points to 5.561%, just below Monday’s peak of 5.583% — a level not seen since 2002, as the Wall Street Journal reports.

The latest leg of the yield rise comes from the U.S.–Iran deadlock over the terms for reopening the Strait of Hormuz, even as a growing number of tankers transit the waterway. According to Danske Bank analyst Antti Ilvonen, yields remain under upward pressure from energy prices “while the U.S. and Iran appear stuck in negotiations.”

Brent crude rose 2.2% to $107.55 a barrel. High oil prices are fueling market expectations of further Fed rate hikes after September’s increase: money markets are pricing 100 basis points of hikes over a 12-month horizon, according to LSEG.

But analysts stress that high yields also reflect the strength of the U.S. economy: according to James Reilly, senior markets economist at Capital Economics, the jump in the 10-year yield to around 5.25% “reflects higher oil prices and a strong U.S. economy more than AI debt issuance or fiscal concerns.” J.P. Morgan strategists note that at the 30-year maturity “oversold conditions persist, but we now await fresh evidence that the market is starting to respond to those conditions.”

Investors await this week’s PCE data — the Fed’s preferred inflation gauge — as well as Friday’s jobs report, which will give fresh signals on the path of interest rates.