30-year US Treasury yield hits highest level since 2007

The yield on the 30-year US Treasury bond climbed above 5.3% on Monday, reaching its highest level in 19 years as investors assessed mounting inflation and fiscal risks.

The long-term yield rose to as high as 5.31%, a level last seen in June 2007. The benchmark 10-year Treasury yield also climbed to around 4.73%, compared with 4.70% at the end of last week.

Bond prices and yields move in opposite directions.

The selloff in long-dated government debt came as rising oil prices fueled concerns that energy costs could keep inflation elevated and limit the Federal Reserve’s ability to ease monetary policy.

Brent crude climbed above $90 per barrel during the session amid renewed tensions between the US and Iran and continued uncertainty surrounding shipments through the Strait of Hormuz.

Investors also remained concerned about the US fiscal outlook and the growing volume of government borrowing. The Treasury sold $25 billion of 30-year bonds last week at a yield of 5.22%, the highest auction rate since 2001.

Higher Treasury yields raise borrowing costs across the US economy because government securities serve as benchmarks for mortgages, corporate debt, and other loans. They can also weigh on stock valuations by making relatively safer government bonds more attractive to investors.

US stock markets closed lower Monday, with the Dow Jones Industrial Average shedding more than 270 points, while the S&P 500 and Nasdaq Composite also declined.