On Monday (May 18, 2026), US Treasuries continued to be sold off, with the yield on 30-year Treasuries rising to its highest level in nearly three years, as investors’ concerns over accelerating inflation triggered a global debt sell-off.
Oil prices continued to rise under the influence of US President Trump’s renewed pressure on Iran to end the Iran war. The yield on 30-year Treasury bonds rose by 4 basis points to 5.16% at one point, reaching the highest level since October 2023.
The yields on 10-year and 2-year treasury bonds reached 4.63% and 4.10% respectively, hitting their highest levels since February 2025. The yield on Japan’s 30-year treasury bond soared to its highest level since its issuance in 1999, while bond yields in Australia and New Zealand declined.
Bond traders often view a 5% rise in the 30-year US Treasury as the “bottom line” that attracts bargain hunters. However, the current surge in long-term borrowing costs could upend this view and signal a new trading range for the $31 trillion US Treasury market, which is a major driver of global debt costs.
Guninder Singh Dhillon, head of US interest rate strategy at BNP Paribas, said, “There is no anchor point above 5%,” and he advised clients to set the target range for the 30-year Treasury yield at 5.25% to 5.5%. “Long-term Treasury holders are more sensitive to price than ever before.”
People are worried that the sharp rise in energy prices caused by the closure of the Strait of Hormuz will force central banks, including the Federal Reserve, to maintain high interest rates. Coupled with concerns over the US fiscal deficit and signs that the economy remains resilient, this has ultimately led investors to seek higher returns on long-term government bonds.
Since the United States and Israel launched attacks on Iran at the end of February, the bond market has undergone a complete transformation. Before the war, traders were betting on two interest rate cuts of 25 basis points each this year; now, the interest rate swap market is almost certain that there will be an interest rate hike in March 2027.
The sell-off has been reflected in the government’s financing costs. The 30-year Treasury bond auction held in mid-May saw the interest rate exceed 5% for the first time since 2007. Even at such a high rate, investor demand was not particularly strong.
If the sell-off persists, higher yields will push up mortgage and corporate borrowing costs in the United States, threatening the growth of the world’s largest economy. This has sparked speculation about the policy response from government officials, who have already begun to shift borrowing maturities to shorter terms.
