U.S. 10- and 30-Year Treasury Prices Hit 19- and 22-Year Lows; Yields in Mid-5% Range

[Financial News] U.S. Treasury prices, which have been trending lower, plunged again recently to their lowest level in 19 years. The decline came as rising international oil prices increased the likelihood of a higher U.S. policy rate.
As of the 28th (local time), the secondary-market yield on the 10-year U.S. Treasury rose 0.09 percentage points from the previous session to 5.25%, reaching a 19-year high. The 30-year yield also climbed to 5.57%, its highest level since 2004. Because bond prices are determined by discounting their maturity value using secondary-market yields, they fall as yields rise.
Treasury prices plunged as rising oil prices heightened concerns about inflation in the United States and intensified fears of a higher U.S. policy rate. U.S. President Donald Trump said in a statement on the 26th that he rejected Iran's proposal to reopen the Strait of Hormuz. Iran subsequently declared that it would not alter the proposal.
In international energy markets, skepticism grew that normalization of the Strait of Hormuz would be delayed and oil supply disruptions could persist amid the extreme standoff between the United States and Iran. West Texas Intermediate crude oil (WTI) surged nearly 4.5% intraday on the 28th to as high as $96.54 per barrel. Oil prices later gave back most of their gains, rising to $92.6, after reports emerged of repairs to a Saudi Arabia pipeline and the possibility that the United States could ease sanctions on Iran. Treasury yields, however, remained elevated.
The Federal Reserve (Fed) may have to raise its policy rate further if rising oil prices push up inflation in the United States. The swaps market has fully priced in the possibility of at least three additional 0.25-percentage-point rate hikes by the Fed over the next 12 months, while also pricing in the possibility of a fourth hike.
Ian Lyngen, head of U.S. rate strategy at U.S. investment bank BMO Capital Markets, said, "It is clear that the potential shock of the war with Iran on the global economy is a key driver of the macroeconomic outlook."
Bond prices, which provide a fixed amount at maturity, fall as the prevailing policy rate rises. The Treasury sell-off has intensified over the past month, reaching its strongest level since Donald Trump's announcement of sweeping tariffs in April last year. The U.S. Treasury Department has increased its purchases of long-term Treasuries but has been unable to prevent prices from falling.
As a result, the price gap between long-term and short-term Treasuries is narrowing rapidly. Last week, the yield spread between the 10-year and 2-year U.S. Treasuries narrowed to as little as 0.17 percentage points, its narrowest level since early 2025. Markets expect this week's U.S. Personal Consumption Expenditures (PCE) Price Index, Institute for Supply Management (ISM) index, and jobs report to determine the direction of interest rates and Treasury prices.
 
[email protected] Park Jong-won Reporter