The U.S. 30-year Treasury yield surged to 5.5 percent Thursday, its highest level since 2004, extending a global bond market sell-off that has pushed yields across major developed economies to multi-year highs.

The benchmark 10-year Treasury yield climbed to 5.22 percent, reaching a new high for the year and its loftiest level since 2007. The move represents a 20 basis point advance over the week, signaling a sharp recalibration in fixed-income markets.

The two-year yield, the most sensitive barometer of near-term Fed expectations, surged to 4.93 percent from 3.48 percent at the start of the year. This sustained move reflects market expectations for rates to stay elevated well into next year.

The sell-off pivoted on new data released Wednesday from S&P Global showing robust U.S. business activity in September alongside persistent inflationary pressures, particularly from energy. The reports prompted traders to raise rate hike probability estimates dramatically. According to the CME FedWatch tool, the probability of a Fed rate hike in October jumped to 71 percent from just 11 percent one month prior.

Brent crude settled at $106.60 per barrel, up 3.41 percent Thursday, after climbing to an intraday high of $108. Prices briefly retreated to approximately $104 on reports that U.S. and Iranian negotiators discussed reopening the Strait of Hormuz, then recovered by day's end.

Gennadiy Goldberg, head of U.S. rates strategy at TD Securities, said the current market is "a very tricky environment" where "investors are really trading headlines more so than anything else, just because of the lack of certainty."

The yield surge is not confined to U.S. markets. Ten-year yields in France and Germany both reached their highest levels in approximately 15 years. Japan's 10-year yield climbed to 3.08 percent, a level unseen since 1996. Nigel Green, CEO of deVere Group, said "every major bond market's feeling the heat at once," noting that "anyone positioned for a global easing cycle has had the ground pulled from under them." The global bond market is on pace for its worst week since 2024.

The move in yields directly increases borrowing costs across the economy, affecting consumers, businesses, and governments. Market participants are de-risking ahead of the weekend given the lack of certainty in the current environment.