The global bond sell-off sharpened on Thursday, pushing the U.S. 10-year Treasury yield to 5.327%—a level last seen in April 2002—as investors reassessed the staying power of inflation and the cost of financing heavy government debt loads.¹

The move came after U.S. manufacturing data for September showed expansion alongside renewed price pressure. The Institute for Supply Management’s prices index jumped 6.8 points to 77.9, while order backlogs also rose, adding to the case that inflation may not recede smoothly.¹ The 30-year Treasury yield climbed to 5.678%, likewise its highest in 24 years. Because bond prices and yields move in opposite directions, the rise signalled a broad retreat from government debt.¹

The sell-off was global. Germany’s 10-year bund briefly topped 3.6%, while yields rose across France, Italy and Britain; Japan’s 10-year rate reached its highest level since the mid-1990s.¹ The underlying concern, according to the Institute of International Finance, is that major economies face “persistently large deficits and rising interest expenses.”¹

Stocks felt the spillover almost immediately. The S&P 500 slipped 0.2% after surrendering an early gain, putting it on course for a seventh decline in eight sessions, while the Dow and Nasdaq also fell.² Higher Treasury yields feed directly into mortgage, auto-loan and credit-card rates, tightening the squeeze on households as they also make richly valued growth shares harder to justify.¹

Oil added another layer of volatility. With Brent crude back above $100 a barrel amid disruption to Middle East exports, Nomi Prins of Prinsights Global said buyers could eventually step in at higher yields—but cautioned that oil and inflation were keeping the long end of the market unstable. A significant fall in oil prices or a regional resolution, she said, could pull Treasury yields lower.¹