The 10-year U.S. Treasury note yield — the key benchmark for U.S. government borrowing — was more than 2 basis points higher in the early hours, at 4.6173%, its highest level in 15 months.
The longer-dated 30-year Treasury bond yield, which is more sensitive to political risks, has now reached a two-decade high, at 5.1418%, after a 1 basis point rise on Monday.
The 2-year Treasury note yield, which tends to react in line with short-term Federal Reserve interest rate decisions, was also more than 1 basis point higher at 4.1008%.
One basis point is equal to 0.01%, and yields and prices move in opposite directions.
The latest spike in borrowing costs reverberated across global markets Monday, ahead of a key meeting of G7 finance ministers and central bankers in Paris later.
Yields on 10-year German bunds rose more than 2 basis points to reach 3.1827%, while Japan’s 10-year JGB surged 13 basis points to reach 2.739%.
In the U.K., yields on 10-year Gilts, the benchmark for British government debt, eased slightly. Yields were lower by about 1 basis point in early dealmaking, but remain elevated at 5.169% amid uncertainty over the fate of Britain’s Prime Minister Keir Starmer. The 30-year Gilt yield was about 3 basis points lower at 5.818%.
With the economic fallout from the Middle East conflict front and center of the G7 summit, central bankers now face a tightrope on interest rates, said Will Hobbs, chief investment officer at Brooks Macdonald.
“Inflation is going to be a tricky, annoying problem for central banks and bond investors,” Hobbs told told CNBC’s ‘Europe Early Edition’ Monday.
Oil prices rose again on Monday, with Brent crude, the international benchmark, up 1.8% to reach $111.16 a barrel, while U.S. West Texas Intermediate futures were last seen trading at $107.56 per barrel, a rise of more than 2%.
Lizzie Galbraith, senior political economist at Aberdeen, said the energy price shock and ongoing U.K. political turmoil, which could herald a decisive shift to the left under a new Labour prime minister, puts “an extra risk premia” on U.K. gilts.
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