US Treasury yields widen sharply on a monthly basis, with 30-year yield hitting a 19-year high; curve steepening coincides with deepening inflation concerns

智通财经2026/08/01 02:11

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The yield on long-term U.S. Treasury bonds is expected to record a significant monthly increase this month, with the 30-year yield hitting a 19-year high of 5.275% and the 10-year yield once rising to 4.747%, marking its highest level since January 2025. The ongoing Iran war and uncertainty around Federal Reserve policy prospects provide dual momentum, as every escalation in geopolitical tensions drives up the term premium.
Trump announced a "major breakthrough" in the Gaza peace agreement, but both Hamas and Israel claim obstacles remain. Meanwhile, reports of oil tankers being forced to turn back in the Strait of Hormuz have prompted traders to reassess transportation risks. Both U.S. crude and Brent crude rebounded by more than 1%, with rising oil prices further strengthening inflation expectations and boosting long-term bond yields.
This week, the Federal Reserve kept interest rates unchanged by a vote of 9 to 3. Three dissenters advocated an immediate rate hike to bring inflation back to the 2% target. However, Chair Walsh, apart from reaffirming his intention to lower inflation, provided little further guidance on policy direction. The lack of internal consensus and a shift in communication style has heightened market uncertainty over upcoming decisions. The President of the Richmond Fed also stated that it is difficult to judge whether the current rate level is sufficient to curb inflation.
The yield spread between two-year and ten-year bonds widened to 45.6 basis points, reaching its highest level since May 27. This curve steepening reflects both economic expansion expectations and hints at possible acceleration in inflation. The two-year yield has risen for a fifth consecutive month, setting the longest uptrend since April 2022. Pricing on the short end for rate expectations continues to be repeatedly adjusted.
Federal funds futures show a roughly 65% probability of a rate hike in September, lower than nearly 82% a week ago but higher than Thursday's level. The break-even yield for ten-year inflation-protected Treasury bonds is about 2.28%. Market pricing for average inflation over the next decade still exceeds the Federal Reserve's target. The curve steepening and persistent inflation expectations are mutually reinforcing, and the correction risk for long-term interest rates has yet to be fully released.

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US Treasury yields widen sharply on a monthly basis, with 30-year yield hitting a 19-year high; curve steepening coincides with deepening inflation concerns

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