US borrowing costs hit their highest level since the global financial crisis after fading hopes for a US-Iran deal pushed oil higher and deepened a Treasury sell-off. The 10-year Treasury yield touched 5.27%, and Brent crude jumped more than 4% before paring gains.
US Treasuries sold off sharply on Monday as 10-year yields rose as much as 0.09 percentage points to 5.27%, the highest level since June 2007. The move came after President Donald Trump rejected Iran's proposal to reopen the Strait of Hormuz, leaving no clear path to ending the seven-month war.
Oil jumps, then pares gains
The global oil benchmark Brent crude moved on the fading deal hopes. Brent rose more than 4% to a high of $108.83 a barrel before easing back to settle 0.9% higher at $105.28.
Yields extend a five-session climb
Treasury yields have risen for five consecutive sessions and are up more than 0.5 percentage points since mid-August, when Treasury Secretary Scott Bessent announced an expanded bond buyback programme meant to calm the market. The two-year yield also climbed to 4.96%, a 28-month high, though both instruments backed off their intraday highs by the afternoon.
According to the Financial Times, Barclays global chair of research Ajay Rajadhyaksha said there was "nothing magical about these yield levels". He added it would take a substantial shift — such as a slowing US economy — to reverse the sell-off.
Stocks slip as borrowing costs bite
The rise in yields and oil prices also weighed on equities, with the S&P 500 closing 0.8% lower and the Nasdaq 100 dropping 1.1%. Mortgage rates have pushed above 7% as the sell-off feeds into household borrowing costs, just weeks before midterm elections in which affordability has become a central issue.
Separately, the Federal Reserve raised rates earlier this month for the first time since 2023, and futures markets now price two more quarter-point increases by January. UK 10-year gilt yields rose to 5.44%, their highest since 2007, while French borrowing costs reached their highest level since 2008.
Source: Financial Times
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