U.S. Bond Yields Hit 2008 Highs Amid Conflict Costs

A sharp Treasury selloff has pushed U.S. bond yields to their highest levels since the 2008 financial crisis. Benchmark 10-year yields reached 4.71% and 30-year yields hit 5.19% on Thursday, driven by renewed fighting in the Iran conflict and rising oil prices.

Kevin Warsh, Chairman of the Federal Reserve, has contributed to market volatility by reducing forward guidance in favor of a data-driven policy. This approach differs from that of his predecessor, Jerome Powell, and has led investors to reprice expectations for the benchmark rate, which is now projected to peak near 4.23% next June. The current benchmark rate range stands at 3.50%-3.75%.

Fiscal pressures are mounting as Secretary of Defense Pete Hegseth stated the cost of the Iran conflict has risen to $37.5 billion. Markets are now awaiting Treasury Department funding updates on August 5, which will provide details on auction sizes for longer-dated debt.