The accelerating global bond sell-off has pushed the benchmark US Treasury yield to levels not seen since the start of 2025, as investors contend with inflation concerns and a heavy influx of corporate debt during the typically quiet month of August.

Treasuries declined further on Tuesday, with yields across maturities rising by 1 to 2 basis points. The 10-year yield climbed roughly 2 basis points to 4.75%, marking its highest level in 19 months. Sovereign debt markets from Europe to Japan have followed a similar trajectory, driven by uncertain inflation outlooks and shifting dynamics among bond buyers.

Earlier in the day, Germany sold 30-year bonds via bank syndication at the highest yield in 15 years. Ian Lyngen, head of US rates strategy at BMO Capital Markets, noted in a client report that "the Treasury sell-off has itself evolved into a macro event."

The bustling corporate bond issuance calendar added to Tuesday's market turbulence. August issuance has already surpassed $145 billion, setting a record for this period, while the outlook for Middle East peace suffered another setback. President Trump stated he has no intention of extending the soon-to-expire Iran agreement, and tensions in the Strait of Hormuz have reignited.

Brent crude climbed above $91 per barrel on Tuesday, having earlier touched its highest point since late July. Despite these pressures, traders have pared back bets on further increases in US borrowing costs this year, following a batch of economic data that supports the Federal Reserve's cautious stance.

Interest rate swap markets now indicate roughly a 35% probability that Fed officials, led by Chair Kevin Warsh, will raise rates at their September meeting. For October, the odds are seen as roughly a coin flip, with a full rate hike not priced in until January 2027. Lyngen commented, "We don't expect the Fed to hike next month, but that doesn't mean the market will price in a zero probability of a hike on the eve of the decision." He added that "Warsh's removal of forward guidance has certainly complicated the policy outlook."