US Treasurys rallied on Friday morning following a week of dodgy inflation data and as traders looked to a more accommodative rate policy under new Federal Reserve Chairman Kevin Warsh.
The harvest on the 30 year bond jumped 8.6 points to just under 5.1%, the highest since May 22, 2025 and approaching the highest since October 2023.
The harvest on the 10-year Treasury note – the main benchmark for US borrowing – rose 7 basis points to 4.55%.
Meanwhile, the 2 year Treasury note The yield, which usually reacts in line with short-term Fed rate decisions, was more than 6 basis points higher at 4.06%.
One basis point equals 0.01%, and yields and prices move inversely with each other.
The yield jump comes as Warsh, who was confirmed by the Senate on Wednesday, faces a tough inflation picture. President Donald Trump continues to push for interest rate cuts, even as consumer price data and imports show rising prices.
Reports this week showed the rate of increase in consumer prices at 3.8%, the highest since May 2023. Similarly, producer prices, which measure wholesale costs and signs of pressure on pipeline inflation, came in at an annual average of 6%, the highest since late 2022.
Also, the cost of imports increased by 1.9% in the month of April, and 4.2% on a 12-month basis, data published by the Bureau of Labor Statistics showed on Thursday, as the conflict in the Middle East increased the prices of energy, causing buyers to increase their costs. The annual increase in import prices was the highest since October 2022, while the 8.8% increase in export costs marked the highest rate since September of that year.
The movement in bond markets is a reminder that “inflation is still a problem … the debt and deficit issue (especially in the UK) and sovereign bonds that are largely owned by foreigners are now a source of funds,” Peter Boockvar, chief investment officer of One Point BFG Wealth Partners, wrote in a morning note.
“Long-term interest rates now govern monetary policy,” he added. “I wish Kevin Warsh the best … but he still has to deal with the circumstances around him.”
The problems in the US bond market also reflected the ongoing financial challenges in the US
Although the government recorded a budget surplus of $215 billion in April – a normal month for tax collections – it was 17% below the same month in 2025.
The spiking harvest has not only been a problem in the US
German bonds jumped again, with the 10-year yielding 3.127% and benchmark Japanese government bonds rising 7 basis points to 2.69%.
Data releases expected later on Friday include monthly industrial production data from the Fed, as well as the latest New York state manufacturing jobs index for April.
