Treasurys spiked on Friday as inflation signals continue to muddy interest rate expectations under the new Federal Reserve chair Kevin Warsh.
U.S. Treasury yields spiked on Friday following a week of messy inflation data and as traders looked to price interest rate policy under new Federal Reserve Chair Kevin Warsh.
The yield on the 30-year bond jumped more than 10 basis points to yield 5.114%, the highest since May 22, 2025, and nearing the highest since October 2023.
The yield on the 10-year Treasury note — the main benchmark for U.S. borrowing — surged more than 11 basis points to 4.575%.
Meanwhile, the 2-year Treasury note yield, which tends to react in line with short-term Fed rate decisions, was more than 8 basis points higher at 4.075%.
One basis point equals 0.01%, and yields and prices move inversely to each another.
The jump in yields comes as Warsh, who was confirmed by the Senate on Wednesday, grapples with an increasingly complicated inflation picture. President Donald Trump continues to push for interest rate cuts, even as data on consumer prices and imports shows prices ticking higher.
Reports this week showed the consumer price index inflation rate at 3.8%, its highest since May 2023. Similarly, producer prices, which measure wholesale costs and signal pipeline inflation pressures, came in at a 6% annual rate, the highest since late-2022.
Also, the cost of imports rose by 1.9% for the month of April, and 4.2% on a 12-month basis, data published by the Bureau of Labor Statistics showed Thursday, as the conflict in the Middle East drives up energy prices, prompting importers to hike their costs. The annual import price increase was the most since October 2022, while an 8.8% surge on export costs marked the peak since September of that year.
On top of the rough data, energy prices jumped again after President Donald Trump left China with little to show from a meeting between the U.S. leader and his Chinese counterpart, Xi Jinping.
West Texas intermediate crude, the U.S. benchmark, rose to $104.39, up $3.22 a barrel, while Brent crude, the global yardstick, hit $108.30, up $2.58 a barrel.
The bond market movements are a reminder that "inflation is still a problem ... debts and deficits matter (particularly in the UK) and sovereign bonds that are heavily 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 end rates are now in control of monetary policy," he added. "I wish Kevin Warsh the best ... but he will still be subject to his surrounding macro circumstances." Troubles in the U.S. bond market also reflected ongoing fiscal challenges in the U.S.
Though the government recorded a budget surplus of $215 billion for April — typical for the month as tax collections come in — it was 17% below the same month in 2025. Financing problems continued to be an issue, as the $97 billion spent for interest costs on the debt was the second-highest expenditure after Social Security.
Spiking yields haven't been an issue confined to the U.S.
German bunds jumped as well, with the 10-year yielding 3.127% and benchmark Japanese government bonds up 7 basis points to 2.69%. UK gilts hit 4.56%, up more than 8 basis points at the 10-year level.
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