Global government bonds are ending their worst quarter since 2024, with $100 oil once again threatening the world economy with stubborn inflation.

A Bloomberg index of government bonds is heading for its biggest quarterly decline since the fourth quarter of 2024, when Donald Trump won his second U.S. presidential term and investors began preparing for more expansionary fiscal policy.

U.S. Treasuries were hit hard in the latest selloff, with the 30-year yield rising to 5.64%, the highest since 2002. Shorter-dated bonds also sold off during the same period.

Ongoing conflict in the Middle East, booming artificial intelligence spending and a strong U.S. economy are all signaling to investors that inflation may be more severe than they previously expected. Central banks in Australia, the eurozone, Japan, Norway and the United States have all raised interest rates over the past three months.

"The third quarter did not just dash hopes for 'lower for longer' rates — it was like pouring scarce diesel on those hopes and setting them ablaze," said Michael Every, global strategist at Rabobank, adding that the biggest question now is how many more rate hikes there will be.

In the U.S., traders reduced bets on another Federal Reserve rate hike in October on Wednesday after the Fed's preferred inflation gauge came in below expectations. Traders still expect at least three more rate increases over the next year.

Among major global bond markets, France saw the worst selloff. With next year's presidential election approaching, investor sentiment is tense; with only seven months until the vote, opposition parties have been unwilling to make concessions to President Emmanuel Macron's outgoing government. The French 10-year bond yield rose 1.15 percentage points during the quarter to 4.8%, the worst quarterly performance since at least the birth of the euro in 1999. French government bonds underperformed on Wednesday after the latest inflation data showed the country's price growth accelerated in September to the fastest pace in more than two years, putting more pressure on European Central Bank policymakers.