US Treasury Yields and Global Rates Surge Amid Inflation Pressures
September saw US 10-year Treasury yields jump 48 basis points as monetary expectations shifted. Meanwhile, the RBA hiked rates to a 15-year high of 4.60% amid ongoing inflation pressures.
September brought a sharp surge in 10-year US Treasury yields, jumping 48 basis points—the steepest monthly move since October 2024. According to a review by Magdalene Tao, fixed income analyst at Julius Baer, the rise in nominal yields was primarily driven by higher real yields and a repricing of monetary policy expectations, rather than a spike in inflation expectations. Meanwhile, renewed pressure and spread widening were observed in the lower-quality segment of the credit market.
Simultaneously, the Reserve Bank of Australia (RBA) raised its interest rate to 4.60%, a 15-year high, driven by persistent inflation pressures and energy costs. However, less hawkish remarks from Governor Michele Bullock and moderate August inflation data led to a decline in the Australian dollar (AUD/USD) and pushed back market expectations for further rate hikes.
According to Julius Baer, current market conditions reinforce the preference for investing in higher-rated credit and maintaining selective exposure to intermediate duration (5–7 years), rather than exposure to the long end of the yield curve or weak balance sheets.
Meanwhile, behind the scenes in the foreign exchange market, a real drama is unfolding in the US debt market. Government bond yields continue to climb to historic highs: the yield on 10-year Treasury bonds climbed closer to 5.30%, the highest level since 2007. At the same time, the 30-year bond yield crossed the 5.63% threshold, a peak not seen since 2002.
