The yield on the 30-year U.S. Treasury bond climbed to its highest level in 24 years on Tuesday, deepening a selloff that is pushing mortgage rates toward 7.6%.
The long bond touched 5.612% in intraday trading, the highest since June 2002, Dow Jones Newswires reported. The 10-year yield, which mortgage rates closely track, rose about 4 basis points to roughly 5.28% by midday, according to Yahoo Finance.
Homebuyers are already paying for it. The average 30-year fixed mortgage rate reached 7.58% on Tuesday, according to Mortgage News Daily.
The rout has been building for weeks. Higher energy costs tied to the war with Iran, a resilient economy and heavy government borrowing have fed fears that inflation will stay elevated, Reuters reported last week. The Federal Reserve raised rates on Sept. 16, and by late last week traders saw better than a 75% chance of another hike in October, CNBC reported, citing CME Group's FedWatch tool.
Tuesday's labor data offered little relief. Job openings fell by about 256,000 to 7.08 million in August, the lowest in five months and below economists' forecasts, the Labor Department said. Hires edged higher. Soft demand at government bill auctions added to the pressure on bonds, Dow Jones reported.
Stocks wobbled through the session. Oil prices rose for a second straight day as concern over Middle East supply outweighed signs that crude exports from the region are recovering, according to Reuters.
Some investors now see 6% on the 10-year note as the next level that could rattle markets and corporate borrowers, Reuters reported. The government releases the September jobs report on Friday.