30-year U.S. Treasury rate hits 14-month high

Rates on 30-year U.S. Treasuries hit 14-month high

In the New York market on the 6th local time, the 30-year U.S. Treasury yield rose to 4.86% at one point, up about 5bp (1bp = 0.01 percentage point), the highest since November 2023.

The 10-year rate also rose to 4.64% at one point, the highest level since May last year.

Treasury interest rates and prices move in reverse.

Treasury interest rates rose as U.S. President-elect Donald Trump refuted media reports that he was considering applying his pledge of universal tariffs to only some key items, calling it "fake news."

During the presidential election, Trump pledged to impose 10% to 20% universal tariffs on all imports.

Since the U.S. presidential election in November last year, interest rates on government bonds have been on the rise on expectations that protectionism, including Trump's tariff policies, will spur inflation.

At a meeting of the Federal Open Market Committee (FOMC) last month, the U.S. central bank, the Federal Reserve System (Fed), announced that it would speed up the rate cut by lowering the expected rate cut this year from 1 percentage point to 0.5 percentage points.

Bloomberg News said the market was "a preview of how Trump will shake up the financial market in the coming months."

However, supply pressure due to weak demand for government bond bids also played a part in the surge in government bond interest rates, Bloomberg said.

Bidding for three-year U.S. Treasuries rose more than 1 basis point from the previous session to 4.332%, which means demand fell short of expectations.

"There's a huge amount of bonds pouring into the market," said Gregory Peters, PGIM's bond division co-chief investment officer. "Supplies continue to grow," he said, adding that slowing inflation could put more pressure on the bond market if it stalled or headed in the opposite direction.

Since Trump's victory in the presidential election, long-term products, which are most affected by inflation among U.S. government bonds, have been on the rise more than short-term ones.