LONDON, UK: A deepening selloff in government bonds pushed U.S. long-term borrowing costs to their highest level since 2004 on Friday, as strong economic growth, mounting public debt and rising energy prices increased pressure on global bond markets.

The yield on the 30-year U.S. Treasury climbed to just near 5.50 percent, while the benchmark 10-year yield stood at 5.17 percent. Bond yields rise when prices fall.

Government bonds have been under pressure for months as the war with Iran drives up energy costs and investors grow concerned about government spending and inflation.

The selloff accelerated this week after U.S. business activity data indicated strong growth and rising inflation pressures, prompting investors to increase bets on further Federal Reserve interest rate hikes.

Higher borrowing costs are also affecting consumers. U.S. 30-year mortgage rates have risen by about one percentage point since the war began and are now around seven percent, close to their highest level in two years.

"Obviously the higher things go, the worse everything looks, and the more expensive U.S. mortgages will be, for example, and the bigger the debt interest burden of the federal government," said Daiwa Capital's head of economic research Chris Scicluna.

Investors have so far absorbed the increase in yields amid resilient economic growth, strong corporate profits and heavy spending led by the artificial intelligence boom. The tech-heavy Nasdaq closed at a record high on Monday.

The rise in yields has extended beyond the United States. Germany's finance agency said on September 24 that it expects federal borrowing to reach a record 525.5 billion euros (US$598 billion) in 2026 and increase further next year, largely because of refinancing needs and growing requirements for special funds.

Germany's benchmark 10-year bond yield briefly rose above 3.5 percent this month, its highest level in 17 years. Japan's 10-year bond yield reached its highest level since 1996 on Thursday.

Long -term UK Gilts are selling on yields above 5.80 percent.

In the United States, Treasury Secretary Scott Bessent has taken measures to contain borrowing costs, including intervening to buy yen to prevent Japanese officials from selling Treasuries and expanding buybacks of 20- and 30-year debt. Yields have nevertheless continued to climb.

Nominal U.S. growth ran at around eight percent in the second quarter, and New York Federal Reserve President John Williams said on September 24 that the economy was showing "remarkable resilience".

"Treasuries are competing with the rest of the market to be purchased, and so you know, the question is, how much higher could it go?" said Hank Calenti, global markets strategist at SMBC EMEA.