The yields on longer-dated U.S. Treasurys rose Tuesday, adding to their rip-roaring moves to multi-year highs due to concerns around inflation and central bank monetary policy.
The 30-year Treasury bond yield, which typically reacts to geopolitical developments, was more than 2 basis points higher at 5.585%. Earlier in the session, it jumped to just above 5.6%, or its highest level since June 2002 when the long-dated bond yield hit 5.644%. The 10-year U.S. Treasury note yield — the key benchmark for mortgage borrowing, auto loans and credit card debt — traded about 1 basis point higher at 5.253%.
The yield on the 2-year Treasury note, which tends to move in line with short-term Federal Reserve interest rate decisions, fell more than 3 basis points to 4.891%.
One basis point is equal to 0.01%, and yields and prices move in opposite directions.
"Investors remain very focused on inflation and they're more worried about the fiscal deficits here in the U.S... [as well as] the amount of Treasury supply," JoAnne Bianco, senior investment strategist at BondBloxx Investment Management, told CNBC. "All of those things make them think there needs to be more term premium."
The recent spike in borrowing costs, which has seen yields move to multiyear highs, comes as the U.S. and Iran held separate talks with mediators with the aim of resolving the ongoing conflict in the Middle East, according to a report by Al Jazeera.
The seven-month war continues to weigh on energy prices, fueling investor expectations of further rate hikes from the Federal Reserve to help tackle runaway price increases, which have been exacerbated by rising government debt.
Traders are now pricing in a more than 72% chance of another Fed rate hike at its next meeting in October, according to the CME FedWatch tool. That comes after the central bank's Federal Open Market Committee earlier this month voted by 12-0 to raise its main interest rate by 25 basis points.
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