A broad selloff of government bonds sent US Treasury yields to their highest levels since the 2007 financial crisis on Wednesday. The 10 year Treasury note yield rose 0.147 percentage point to 5.113%, marking the largest one day increase since April 2025, while the 30 year yield climbed above 5.37%. The spike follows September PMI data showing the strongest private sector expansion since July 2021, with a composite index of 58.4 and manufacturing at 57.0, alongside a weak auction for 5 year notes that cleared at 5.033%.

Market participants now price a 70% probability of a Federal Reserve interest rate hike in October, a reversal from less than 10% a month ago. Fed Governor Michael Barr stated that more rate hikes are likely needed as oil prices returned to over $100 a barrel, fueling inflation concerns. The volatility has already pushed 30 year mortgage rates above 7% and increased the annual interest cost for the US government, which currently carries $40T in debt.