Money
Bond markets brace for higher rates as oil keeps inflation hot
Two-year U.S. yields are set for their sharpest monthly jump since 2023 as energy costs climb.
Published: September 29, 2026 · 1 min read
The world’s largest sovereign bond markets are heading for one of their worst months in years as soaring energy costs and stronger growth leave investors pricing an era of higher interest rates for longer, Reuters reported Tuesday.
Two-year U.S. Treasury yields have surged almost 60 basis points in September, on track for the biggest monthly rise since early 2023. Ten-year yields have pushed above five per cent for the first time since 2007 and are poised for about a 50-basis-point monthly climb. Two-year borrowing costs in France, Germany, Britain and Australia are set for their largest monthly jumps since the Iran war began in March. The ICE BofA MOVE index of bond volatility has jumped nearly 30 per cent this month.
Higher government yields feed into mortgages and business loans. The most popular U.S. home-loan rate has risen to a more-than-two-year high. Hyperscaler tech firms have sold more than US$200 billion of bonds this year to fund AI investment, competing with governments for capital. October brings U.S. jobs and inflation data, French budget talks and a U.K. budget that could keep volatility elevated.
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