Global Bond Rout Deepens as 30-Year US Yield Hits 5.11%, Highest Since 2007

The global bond market is in freefall. US 30-year yields hit 5.11% on Friday, the highest since May 2025 and a level not seen in nearly two decades, as geopolitical tensions in the Middle East sent crude surging. The Iran conflict has become the macro flywheel: oil supply worries fuel inflationThe rate at which prices rise across an economy. expectations, which in turn obliterate bond valuations across every region from Japan to Europe to the US.

This is no longer a localized Treasury story. Gilts slumped after UK political uncertainty emerged. Yields are rising in South Africa, Colombia, and India as investors worldwide reprice the inflationThe rate at which prices rise across an economy. risk embedded in long-durationBond price sensitivity to interest rate changes. bonds. The G-7 finance chiefs are set to meet to discuss the selloff's systemic implications. JPMorgan flagged 'bond vigilantes' are back; BofA strategists warned of profit-taking risk in early June if yields climb further. RBC's Calvasina noted that if benchmark yields hit 5%, US equity price-to-earnings multiples will compress sharply.

The damage is cross-sectoral. Energy importers face margin pressure while also battling the erosion of real yields. Tech stocks, which had led the market higher for weeks on AI enthusiasm, sold off sharply Friday as rising discount rates made future cash flows less attractive. The Russell 2000 did rotate up slightly, a sign small-cap value outperformed, but the breadth deteriorated overall. Fund managers and strategists are now openly questioning whether the weeks-long rally in mega-cap tech and AI trades was built on unsustainable assumptions about monetary policy.

The unresolved debate is whether central banks can communicate a patient, on-hold stance that reassures markets without appearing to validate a wage-inflationThe rate at which prices rise across an economy. spiral. Incoming Fed Chair Kevin Warsh inherits an economy where yields are 'unhinged' and energy costs are rising in real time, complicating any pivot-dovish messaging his team might attempt in the coming months.