U.S. Treasury yields reached their highest levels since 2007 on Wednesday, September 23, 2026, as investors reacted to ongoing conflict with Iran and rising government debt levels. The benchmark 10-year Treasury note closed at 5.11 percent, an increase of approximately 14 basis points from Tuesday, while the 30-year bond yield reached a 19-year high of 5.397 percent. Markets in Japan, Germany, and the United Kingdom also saw yields hit multi-year peaks as global selling of government bonds continued.
The current market volatility follows the start of the U.S.-Iran war on February 28, 2026. Prior to the conflict, the 10-year yield stood at 3.96 percent. Tensions increased after a 60-day deadline for a peace deal expired on Monday, September 21, with Iranian officials shifting to an offensive military posture. Supply concerns have been exacerbated by Iranian military actions in the Strait of Hormuz, including a strike on an oil tanker. Consequently, West Texas Intermediate crude oil closed at $92.16 per barrel on Wednesday after exceeding $100 the previous week.
Fiscal concerns are also influencing the market as the U.S. national debt approaches $40.1 trillion, having surpassed the $40 trillion mark in August. The U.S. fiscal deficit for July reached $432.3 billion, the highest monthly total since March 2021. Analysts, including Vasu Menon of OCBC, also attributed the rising yields to heavy borrowing by artificial intelligence companies and a shift toward less transparent policy under Federal Reserve Chairman Kevin Warsh. In the U.S., these yields have resulted in higher borrowing costs, with average 30-year mortgage rates reaching 6.95 percent last week.
The scale of the U.S. fiscal situation involves a national debt nearing $40.1 trillion, with the government paying approximately $1.2 trillion in interest so far this year. This scale affects the broader economy as the government must dedicate more of its budget to servicing debt rather than other public services. The global nature of the sell-off, which saw Japan’s 10-year bond reach a 30-year high and German yields hit levels not seen since 2011, indicates that the increase in borrowing costs is a worldwide phenomenon affecting international markets and government spending capacity across major economies.
The ongoing conflict in the Middle East and the closure of the Strait of Hormuz have knock-on effects for energy prices and inflation. With oil prices fluctuating between $92 and $100 per barrel, businesses and consumers may face higher fuel and transportation costs. What happens next depends on the military situation in the Middle East and future U.S. Treasury auctions. Investors will be monitoring whether the annual inflation rate can be brought down to the Federal Reserve’s 2% target, while the next deadline for diplomatic agreements remains unstated following the expiration of the June ceasefire.