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A trader works on the floor of the New York Stock Exchange (NYSE) in New York City on July 29 (local time), as a screen behind him broadcasts Federal Reserve Chair Kevin Warsh's press conference following the policy interest rate announcement. / Reuters, Yonhap

The yield on the 10-year U.S. Treasury note has climbed to its highest level in nearly two decades. The surge reflects a broad sell-off across global debt markets, fueled by rising oil prices, inflation concerns, and expanding debt issuance, Bloomberg reported on the 15th (local time).

During intraday trading, the 10-year U.S. Treasury yield—which serves as a global benchmark—rose 4 basis points (1 basis point = 0.01 percentage point) to hit 5.02%. That surpasses the peak recorded in 2023, marking its highest reading since 2007.

Rising international crude oil prices, spurred by fears of supply chain disruptions amid Middle East instability, added upward pressure to yields, according to Bloomberg.

Domestically, the 10-year Treasury yield functions as a key reference point for major lending rates, including mortgages, making its ripple effects across the real economy substantial.

With the yield crossing above the psychological threshold of 5%, market attention is increasingly focused on cooling investor sentiment toward risk assets, such as equities, and higher global borrowing costs.

Market caution is spreading ahead of the Federal Reserve's benchmark rate decision on the 16th.

While investors leave the door open for the Fed to raise short-term borrowing costs, concerns persist that yields could climb even higher depending on how the central bank adjusts its policy stance.

"If the Fed keeps rates on hold or strikes a dovish tone, it could amplify volatility in the bond market," said Vail Hartman, a strategist at BMO Capital Markets.

Supply-side pressures also continue to weigh on the bond market. Governments are ramping up debt sales to fund budget deficits and roll over maturing paper, while central banks' halt on purchases has deepened reliance on price-sensitive private investors.

"With the real economy holding up and foreign official demand for Treasuries softening, the scope for long-term yields to decline remains limited," said Phoebe White, a strategist at UBS Group.

Global debt markets are likewise reeling.

Australia's 10-year government bond yield touched a 15-year high, and New Zealand yields also climbed. Japanese government bonds are facing upward yield pressures as well, following reports of potential increases in defense spending.

                                                                                                         Lee Jeong-eun