U.S. 30-Year Treasury Yield Breaks 5.5%

The U.S. 30-year Treasury yield rose to an intraday 5.52% on the 25th, breaking above the 5.5% level. This is the highest figure in 22 years, since 2004.

The 10-year Treasury yield also rose to an intraday 5.2%, its highest level since June 2007. This rate increase is the result of several factors acting together: higher oil prices from the Middle East war, the Federal Reserve's maintenance of a high-rate stance, rising corporate funding demand from expanded AI investment, and concerns that U.S. government fiscal deficits will increase Treasury issuance.

Market analysts say the current high-rate environment is becoming the new norm. Some experts forecast that the 30-year Treasury yield could break 6% within this year.

As the Middle East war has not been quickly resolved and oil prices remain elevated, the situation persists. Because the Fed's interest rate policy focuses more on price stability than on economic growth, the tightening trend is expected to continue until inflation stabilizes to some degree.

The rise in U.S. rates is immediately reflected in Korean government bond and bank bond yields, increasing corporate funding burdens. The upper bound of mortgage rates has exceeded 7%, and forecasts suggest they could enter the 8% range this year.

If rising Treasury yields drive up dollar demand and the won continues to weaken, raw material and import prices could rise again. The Bank of Korea said that global Treasury yield increases during the Chuseok holiday have heightened uncertainty in financial markets, and that it will closely monitor the markets with heightened vigilance.