Global Bond Selloff Deepens on More Fed Hike Bets

The government bond selloff gained strength on Thursday, September 24. The 10-year Treasury yield came in near 5.12% after rising 15 basis points the day before, the biggest daily jump since the tariff turmoil of April 2025. The 5-year topped 5% for the first time since 2007, after an auction with weak demand.

The market started fully pricing in three more 0.25-point Fed rate hikes over the next year, which would take US rates from the current 3.75%-4% range to 4.5%-4.75%. Some are already hedging against a fourth hike. A resilient economy and expensive energy threaten to keep inflation above the 2% target.

A global move

The selloff wasn't limited to the United States: bonds from Japan, Australia, New Zealand, and emerging markets also fell, and the average yield on global government debt neared 4%. The dollar came close to its highest level since July, Asian stock markets fell about 0.6%, and mainland Chinese stocks, 1.5%.

Among commodities, gold fell 0.2%, to about $4,280 an ounce, and Brent returned to $103 a barrel at the time of the original report.

Why a bond's price falls when its yield rises

A bond's yield and price move in opposite directions. A Treasury pays fixed coupons; if the market starts demanding higher rates, the older bond only finds a buyer at a lower price, and the yield for whoever buys at that price rises. That's why a bond selloff shows up in headlines as rising yields.

Treasuries serve as the benchmark for mortgages, corporate credit, and stock valuations. When the risk-free 10-year yield rises, the discount applied to companies' future profits increases, which tends to weigh on growth stocks, and the dollar tends to become more attractive against other currencies.

What the data shows through October 7

The chart shows the 10-year Treasury's daily yield (the ^TNX index, in percent) from May to October 2026. According to daily closes, the yield went from 4.968% on September 22 to 5.114% on September 23, up 14.6 basis points, and closed at 5.162% on September 24.

The rise continued in the weeks that followed. The yield closed at 5.293% on September 30 and at 5.311% on October 5, and on October 7 it touched 5.364% intraday, the period's high, before closing at 5.277%. On May 1 it stood at 4.38%: in just over five months, the increase was about 0.90 percentage points, with a low of 4.31% on May 7.

In the other markets mentioned, gold closed at $4,298.00 on September 24 and at $4,140.70 on October 7. Brent closed at $106.60 on September 24 and at $100.20 on October 7. The euro went from $1.1448 on September 23 to $1.1254 on October 7, in line with the stronger dollar. The S&P 500, on the other hand, closed at 7,801.77 points on October 7, above September 24's 7,704.13.

What to watch

The next US inflation and growth data will show whether the bets on more Fed hikes hold up. Treasury auctions with weak demand, like the one that pushed the 5-year above 5%, also tend to move yields on the same day. The numbers above describe what happened through October 7; they don't indicate where rates are headed from here.

Source: Traders Union.

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