10Y U.S. Treasury yield hits highest since 2002! Oil price returns to $100, triggering a global bond selloff, with 30Y UK gilt breaking 6% for the first time.

Driven by rising oil prices, global bonds came under renewed selling pressure, pushing the benchmark U.S. Treasury yield to its highest level since 2002. On Thursday, the 10-year U.S. Treasury yield rose as much as 6 basis points to 5.34%, breaking through its 2007 peak. Earlier this week, the 30-year U.S. Treasury yield also hit a 24-year high. Brent crude oil prices rose as much as 2.8%, breaking above $100 a barrel. Global government debt continued to convulse, as elevated oil prices linked to the Middle East war transmitted through the global economy, prompting investors to bet that central banks will raise interest rates further. Massive government borrowing and strong investment in artificial intelligence infrastructure are also driving up demand for capital and pushing borrowing costs higher. "The rise in government bond yields is a structural, long-term development," said Steven Barrow of Standard Bank Advisory. "We see the upward move in yields as part of the financial markets' process of finding their way to this 'new normal.'" According to one index, global government bonds recorded their worst quarterly performance since 2024. Thursday's selloff pushed the yield on 30-year UK gilts to 6% for the first time since 1998. Some analysts and investors said that level could also appear in the U.S. Treasury market. In France, the premium of 10-year government bond yields over safer German bunds jumped to 134 basis points, the highest since 2012. Investors will look to Friday's nonfarm payrolls data for clues about the health of the U.S. economy and the Federal Reserve's next move. According to a Bloomberg survey of analysts, nonfarm payrolls are expected to have risen by 85,000 in September. Ahead of that data, the U.S. will release Challenger layoff data, initial jobless claims and ISM manufacturing data on Thursday. Federal Reserve officials also have a busy speaking schedule, with six speeches in total, including one by Fed Governor Chris Waller. Traders expect the Fed to raise rates four more times by 25 basis points each through the end of 2027 even as borrowing costs rise, the world's largest economy continues to show resilience.