TREASURIES-US 30-year yields top 5% after hawkish Fed hold

By Amanda Cooper

LONDON, April 30 (Reuters) - U.S. 30-year Treasury bond yields topped 5% for a second day on Thursday, as oil prices surged after a report Washington may be considering more strikes on Iran and after Federal Reserve officials kept rates unchanged but signalled concern about inflation.

Global fixed income markets came under pressure as crude oil prices broke above $120 a barrel. The June Brent contract, which expires on Thursday, was last at $123, having risen by as much as 7% overnight.

Investors were already concerned that the war in Iran would result in higher-for-longer energy prices, interest rates and inflation.

Thirty-year bond yields were last up 1.3 basis points on the day at 5%, having crossed this threshold for the first time since September on Tuesday, while benchmark 10-year yields were up one basis point at 4.43%.

In his final meeting as Fed Chair after eight years, Jerome Powell said he would stay on as a governor to defend the agency's independence from Trump administration "battering."

Four policymakers dissented on the monetary policy announcement on the grounds that the language in the statement that pointed to an "easing bias" was no longer appropriate, given where inflation is.

RBC Capital Markets economists noted this was the highest number of dissenters in a single meeting since 1992.

"All in all, with tightening off the table for the time being, my view remains that the direction of travel for rates remains lower, despite those hawkish language dissents," Pepperstone strategist Michael Brown said.

Markets show traders now believe the Fed will leave interest rates unchanged for at least another year, with only a 50/50 chance of an April 2027 hike.

Morgan Stanley on Wednesday said it had dropped its existing call for cuts this year and now thinks the Fed will only start cutting next year, as inflationary pressures remain, while economic growth holds up.

"The bar for cuts is higher and the Fed seems prepared to wait," the bank said, adding that policymakers are likely to proceed cautiously as they assess the lagged effects of earlier tightening and the durability of recent disinflation trends.

(Reporting by Amanda Cooper; Editing by Ronojoy Mazumdar)