Global bond sell-off pushes U.S. Treasury yields to fresh 24-year highs

The yield on key U.S. Treasury bonds rose to fresh 24-year highs Wednesday, as the latest global bond sell-off picked up steam.

Benchmark government bonds in France and Italy also rose sharply and were on pace for their biggest one-day jump since March, when the launch of the Iran war rattled global markets. The yield on the U.K. 30-year government bond hit its highest level since 1998.

When bonds fall, their yields rise.

Closely tracking those moves, the 10-year Treasury yield rose as high as 5.35% and the 30-year Treasury yield hit 5.73% — the highest levels for each since 2002.

The bond rout sent stocks tumbling, as investors bet that rising bond yields would raise corporate borrowing costs and cut into profits.

Europe’s broad Stoxx 600 index fell 1%. Benchmark indexes in France and Germany were off by more than 1%, and stocks in Italy on the country’s FTSE MIB index slid nearly 2.5%.

U.S. stocks also dipped Wednesday morning, just a day after both the Nasdaq and S&P 500 closed at record highs. In early trading, the S&P 500 was down 0.6% and the Nasdaq Composite declined by 0.8%.

As stocks fell, oil prices ticked up, adding pressure to bond yields. Brent crude oil rose 1% in early trading, to more than $102 per barrel.

The Treasury Department will sell a $39 billion tranche of flagship 10-year notes at 2 p.m. ET Wednesday, and investors will be closely watching how markets react.

The recent rise in bond yields only adds more pain to governments that have seen their borrowing costs soar since the start of the year.

Overnight, International Monetary Fund chief Kristalina Georgieva warned that governments urgently need to take steps to get their unprecedented debt under control.

She also predicted that government bond yields around the world would remain under pressure because of the ever-expanding artificial intelligence boom.

“Policymakers had a relatively easy ride over the last 17 years, as for all that time interest rates were stuck below GDP growth rates,” Georgieva said in a Bloomberg Television interview. “Higher interest rates now put an end to that.”

Her comments followed multiple reports that Elon Musk’s SpaceX is planning to raise $40 billion in cash to buy AI chips from Nvidia. NBC News has not independently confirmed the reports and SpaceX did not immediately reply to a request for comment.

But if the company follows through, that borrowed $40 billion would join hundreds of billions more in bond sales by AI-linked companies in recent years. The companies are using the money to build data centers and buy equipment with which to fill them.

Some economists believe that the vast sums of money being borrowed by private AI companies could pile additional pressure on government bond yields.

“France may be on the verge of a full-blown debt crisis,” wrote Ed Yardeni, president of Yardeni Research on Sunday.

He noted that the yield on French 10-year government bonds has risen the most of any major economy this year. Coming in second is the United States, while Italy, a country traditionally viewed as far more risky by the bond markets, comes in third.

Apollo economic strategist Huw van Steenis wrote in a Wednesday note, “Hyperscalers have raised $48 billion in bonds in European currencies this year, which is already more than triple the entire amount of 2025.”