US 30-year Treasury yields hit 20-year high amid inflation fears

Yields on 30-year US Treasury bonds rose to approximately 5.32% on August 18, reaching their highest levels since 2007. This surge in long-term borrowing costs is driven by heightened concerns over persistent inflation and geopolitical instability, particularly regarding the conflict in Iran and potential disruptions to oil supplies in the Strait of Hormuz. Crude oil prices have climbed above $90 per barrel, a roughly 30% increase since late February.

In addition to energy-driven inflation, the market is reacting to the massive capital requirements of the artificial intelligence sector, as hyperscalers invest hundreds of billions into data centers and infrastructure. The rise in yields has also pressured global equity markets, with declines seen in the Dow Jones, S&P 500, and Nasdaq.

Economists note that this shift signals an end to the post-2008 era of low interest rates and low inflation. As governments in major economies face high debt levels, the combination of rising rates and increased borrowing needs is creating significant fiscal and refinancing pressures.