The 10-year Treasury yield is ending September with a dubious achievement-its highest quarterly gain in more than three decades.

On Wednesday, the yield surged to 5.264% and is now on pace for an increase of 0.84 of a percentage point over the past three months. The climb is the steepest since the first quarter of 1994.

When government yields rise, it makes lending more expensive for corporates and consumers, and makes existing lower-yielding bonds cheaper. Yields and bond prices move in opposite directions.

For Treasury investors, there's no other way to describe the past three months other than brutal.

The iShares 20+ Year Treasury Bond ETF, a popular long-term U.S. government bond fund, has fallen 9.7% and is on pace for its worst quarter overall since late 2024. On Wednesday, it traded at $78.03, on track for a record closing low.

What's behind the 10-year's climb is the so-called real yield, or stated returns adjusted for inflation. Real yield on the 10-year is a hair's breadth away from 3%, compared with 1.7% right before the Iran war started at the end of February.

Surprisingly, inflation isn't much of a driver-at least not directly. The 10-year break-even, which is the average annual inflation rate that the bond market expects for the next 10 years, is up only 0.1 of a percentage point in the past seven months.

But the Federal Reserve's response to inflation has been a supporting player in the 10-year drama. Investors kicked off the year expecting the Fed to cut interest rates because inflation looked to be heading lower. Instead, it did a sharp U-turn. Now, there's an expectation that the central bank will raise rates four times in the next 12-months. That has helped push up the real yield.

From all of this, there are winners and losers.

One category of losers is corporations, which now have to bear a bigger cost to fund their growth initiatives. The 10-year yield underpins rate corporates must pay on their debt.

"High funding costs means it's a higher hurdle to meet in order to be successful or profitable," said Padhraic Garvey, who leads ING's research team for the Americas. "But at the same time, the growth environment is pretty good for the corporates. ?So there's an auspicious circularity here."

The pain is less for companies that locked in historically low borrowing costs during the pandemic. The cost of higher interest is much less of a problem, and the expense is being outpace by today's higher profits, said Nathaniel Rosenbaum, head of U.S. high-grade credit strategy at JPMorgan Chase.

But for lower-income Americans who don't have spare cash to park in high-yielding assets like Treasury bills, the bond market is no safe haven.