U.S. 30-Year Treasury Yields Hit September Highs as Growth Fears Resurface

U.S. Treasuries started 2026 on the back foot, with bond prices slipping and long-term yields pushing higher as investors embraced a more upbeat outlook for economic growth. The shift in sentiment reduced demand for traditional safe-haven assets, sending yields on longer-dated government debt to levels not seen since early September.

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The yield on 30-year Treasury bonds rose by as much as four basis points to around 4.88%, marking its highest point in several months. Yields on benchmark 10-year notes also moved higher, climbing roughly two basis points to about 4.19%. The upward pressure on rates followed fresh labor-market data showing applications for U.S. unemployment benefits fell last week to one of the lowest readings of the year, reinforcing the view that the economy remains resilient as the new year begins.

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Market participants interpreted the data as further evidence that growth momentum in the United States is holding up, even as interest rates remain elevated. That perception has encouraged investors to rotate away from defensive positions and toward assets more closely tied to economic expansion.

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“A gradual move higher in long-term yields likely reflects growing confidence in the U.S. economic outlook,” said Eugene Leow, a fixed-income strategist at DBS Bank Ltd. “That same optimism appears to be showing up in equity markets as well, where risk appetite remains strong.”

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The pullback in bonds was not limited to the United States. Australian government debt also came under pressure, with yields on three-year and 10-year notes jumping by around nine basis points. The move was fueled in part by expectations that rising commodity prices could provide a meaningful boost to Australia’s growth prospects, given the country’s heavy exposure to global resource markets.

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At the same time, the Australian dollar strengthened, gaining as much as 0.5% against the U.S. dollar and outperforming all of its Group-of-10 peers. Currency traders appeared to view the combination of firmer commodity prices and improving global growth expectations as supportive for the Aussie, particularly if U.S. economic data continues to surprise to the upside.

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“Today’s moves in Australian rates and the currency partly reflect bond investors taking a cautious stance ahead of potentially strong U.S. nonfarm payrolls data for December,” said Homin Lee, a strategist at Lombard Odier. He added that expanding enthusiasm around global metals and commodities trade is also contributing to the positive momentum in Australian assets.

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European bonds followed a similar pattern. Longer-dated government debt in Germany and France declined in early trading, pushing yields higher as investors reassessed the balance between growth and safety. The synchronized selloff across major bond markets highlighted a broader shift in global sentiment, with investors increasingly focused on signs of economic strength rather than downside risks.

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The rise in yields comes as markets continue to debate the future path of monetary policy in 2026. While inflation has eased from prior peaks, central banks remain cautious about declaring victory too soon. Strong labor-market data and improving growth indicators complicate the outlook, as policymakers weigh the risk of cutting rates prematurely against the desire to support economic activity.

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For investors, the early-year move in bonds underscores how sensitive markets remain to incoming data. Even modest improvements in economic indicators can have an outsized impact on yields, particularly at the long end of the curve, where expectations for growth and inflation play a larger role.

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At the same time, higher yields may present both challenges and opportunities. Rising rates can weigh on interest-sensitive sectors and pressure equity valuations, but they can also offer more attractive income opportunities for fixed-income investors who have been waiting on the sidelines.

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As 2026 gets underway, bond markets appear to be signaling cautious optimism rather than outright concern. The decline in Treasuries, Australian bonds, and core European debt reflects confidence that global growth can hold up, at least in the near term. Whether that optimism proves durable will likely depend on upcoming economic releases, including U.S. jobs data, inflation reports, and signals from central banks about how they plan to navigate the year ahead.

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For now, the message from rates markets is clear: investors are starting the year with a greater willingness to take risk, even if that means dialing back exposure to the safest corners of the global bond market.

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