US government borrowing costs climbed to 5% for the first time since 2023 on Monday, driven by an intensifying global bond sell-off as oil prices topped $108 a barrel amid Middle East conflict.
Key facts
- The yield on 10-year US Treasury bonds reached 5% on Monday.
- It is the first time US borrowing costs have hit that level since 2023.
- The global oil price rose above $108 a barrel.
- Houthi attacks on Saudi infrastructure fuelled the oil price surge.
- Wall Street faced renewed selling pressure on the day.
US government borrowing costs have risen to 5% for the first time since 2023, according to the Guardian, as soaring oil prices fuelled by the war in the Middle East triggered an intensifying sell-off in the global bond market.
The yield on 10-year US Treasury bonds — in effect the interest rate the US government pays to borrow — hit the psychologically important 5% threshold on Monday. The move came on a day of renewed selling pressure on Wall Street.
The bond sell-off was linked to a surge in the global oil price, which reached $108 a barrel. The Guardian reported that the increase followed Houthi attacks on Saudi infrastructure.
Rising oil prices have stoked fears about inflation. Higher energy costs can feed through into broader prices, which in turn can push up the interest rates investors demand to hold government debt.
The 5% level on 10-year Treasury yields is widely watched by markets as a significant milestone, given its potential knock-on effects for borrowing costs across the economy, from mortgages to corporate debt.
The developments tie together conflict in the Middle East, energy markets and global finance, with attacks on Saudi infrastructure rippling through into US borrowing costs and equity markets.
Why it matters
US Treasury yields underpin borrowing costs across the global economy, so a rise to 5% can push up the cost of everything from mortgages to business loans. The link to Middle East conflict and higher oil prices shows how quickly geopolitical events can feed into inflation fears and financial markets.
Frequently asked questions
How high did US borrowing costs rise?
The yield on 10-year US Treasury bonds reached 5% on Monday, the first time it has hit that level since 2023, according to the Guardian.
What triggered the bond sell-off?
The Guardian reports the sell-off was driven by soaring oil prices fuelled by the war in the Middle East, with oil reaching $108 a barrel following Houthi attacks on Saudi infrastructure.
How high did oil prices go?
The global oil price reached $108 a barrel, stoking inflation fears, according to the Guardian.