Treasury Five-Year Yield Climbs to Highest Since September 2008

U.S. Treasuries tumbled Monday, driving the yield on five-year notes to the highest level since September 2008 amid speculation persistent inflation will prompt the Federal Reserve to tighten policy more aggressively.

The yield jumped as much as three basis points to 3.11%, extending an advance that has seen the rate more than double this year. The curve steepened as 10- and 30-year bonds underperformed. While Federal Reserve Chair Jerome Powell last week played down the option of a jumbo 75 basis-point rate hike, Richmond Fed President Thomas Barkin said in an interview on Friday that nothing was off the table.

The milestone caps a remarkable selloff in government bonds as central banks round the world pare pandemic-era stimulus to tackle scorching inflation, and comes as investors wait for April U.S. consumer-price data due Wednesday. The Fed has raised rates by 75 basis points so far this year and signaled more tightening to tame inflation now running at the fastest pace in 40 years.