10-year Treasury yield climbs to a 24-year high amid relentless global bond sell-off

U.S. Treasury yields hit their highest level in more than two decades on Thursday as a global bond sell-off deepened. A September manufacturing survey in the U.S. showed a sharp gain in prices.

The 10-year Treasury yield breached a level last seen in April 2002, rising more than 3 basis points to 5.327%. The 10-year is a key benchmark for rates on mortgage and auto loans and credit card debt. The yield on the 30-year Treasury bond climbed almost 4 basis points, to 5.678%, also its highest in 24 years.

Yields and prices move inversely. One basis point equals 0.01%.

“Stocks are near records, but with government bond yields also at multidecade highs, there are questions about how long this rally can last. Some investors also expect higher interest rates to undo the decades-long ‘there is no alternative’ to stocks regime,” Hardika Singh, economic strategist at Fundstrat, said in a Thursday note.

The U.S. manufacturing sector continued to expand in September while showing substantial pressure from higher prices, according to the Institute for Supply Management.

Within the monthly ISM manufacturing index survey, the prices index surged to 77.9, up 6.8 points, while backlogs jumped 4.6 points to 56.4.

Government borrowing costs around the world continued their relentless march upward on Thursday, continuing a months-long trend as investors voted with their feet over a lack of political will to tackle fiscal deficits, while inflation remains stubbornly above target and leading central banks move to push interest rates higher.

Major economies face “persistently large deficits and rising interest expenses — challenges long associated with debt-distressed emerging market sovereigns,” the Institute of International Finance said last week.

Japan’s 10-year yield was last trading at 3.126%, the highest level since the mid-1990s. Japan’s debt has come under pressure from a weaker yen and rate hikes by the Bank of Japan.

The yield on the German 10-year bund, the benchmark for the euro area, topped 3.6%, the highest since 2008, before easing back to 3.58%. Elsewhere in Europe, the French 10-year surged 8 basis points to 4.925%, Italy’s 10-year was up 10 basis points to 4.706%, while the U.K.’s 10-year yield increased 5 basis points to 5.483%.