<\/p>\n
Yields on the US Treasury\u2019s longest-dated bond rose to the highest level in almost two decades as investor concerns mount that accelerating inflation will force central bankers to raise interest rates.<\/p>\n
The 30-year yield rose as much as seven basis points to 5.20% on Tuesday, a level last seen on the eve of the 2007 global financial crisis. Bond markets across Europe and Japan also fell, while the selloff spilled over into US equity markets.<\/p>\n
Yields on government bonds have surged globally in recent weeks as a jump in energy prices caused by the Iran war adds to inflation fears, pushing traders to bet the Federal Reserve will hike rates as soon as this year. Mounting deficits are also prompting investors to demand greater compensation to own longer-maturity debt.<\/p>\n
\u201cThe bond market is pricing in a higher-for-longer rate policy, most visible in the long end of the curve where duration sensitivity is the greatest,\u201d said\u00a0Liz Templeton, a senior product manager at Morningstar. That reflects \u201congoing uncertainty around Fed policy, energy-driven cost pressures, and heavier Treasury issuance.\u201d<\/p>\n
Persistently higher yields threaten to slow the US economy, which has so far proved resilient, and lift borrowing costs for US home buyers and corporations. That prospect is fueling speculation about a policy response by US officials, who already have shifted debt issuance toward shorter-dated maturities.<\/p>\n
Worryingly for bondholders, Tuesday\u2019s selloff was not driven by a surge in oil prices \u2014\u00a0which crept lower\u00a0on the day \u2014 or any individual catalyst. That speaks to a broader nervousness in the market as investors reappraise the clearing price for debt. US 10-year Treasury yields rose as much as 10 basis points to 4.69%, the highest since early 2025, before the move pared to around 4.66%.<\/p>\n
Heavy trading in Treasury futures helped drive the move, particularly in contracts tied to five- and 10-year notes. Investors placed several sizable block trades as yields kept rising, and trading volume in the 10-year futures contract during the morning session in New York was nearly twice the recent average.<\/p>\n
The shift in market sentiment will soon confront incoming Federal Reserve Chair Kevin Warsh. Traders anticipate the Fed\u2019s next move will be a rate increase, potentially as soon as the end of this year. When the Iran war began in late February, they anticipated as many as three Fed cuts in 2026.<\/p>\n
ADVERTISEMENT<\/p>\n
CONTINUE READING BELOW<\/p>\n
\u201cThe market has swung to a clear hiking bias,\u201d said Benjamin Schroeder, a senior rates strategist at ING. That\u2019s because investors are \u201cworried about energy price pressures morphing into something more than just a short-lived inflationary episode.\u201d<\/p>\n
Line in the sand<\/p>\n
The 5% level for 30-year US yields has been considered a \u201cline in the sand\u201d that would spark dip-buying by some investors. The recent moves are challenging that assumption, potentially signaling a new era for the $31 trillion Treasury market, widely considered the premier safe asset and a barometer for borrowing costs around the world.<\/p>\n
Barclays Plc and Citigroup Inc. strategists\u00a0have warned\u00a0clients that yields may breach 5.5%, levels last seen in 2004. And the head of BlackRock\u2019s research unit is recommending investors reduce their exposure to developed-market government bonds \u2014 including Treasuries \u2014 in favor of equities.<\/p>\n
\u201cWith debt rising faster than growth, worsening inflation profiles, and no political will for fiscal reform, there is little reason to reach for the long end,\u201d said Ajay Rajadhyaksha, Barclays Plc\u2019s global chairman of research.<\/p>\n
A similar dynamic is playing out globally, with yields on 30-year UK gilts approaching 6% and Germany\u2019s long-term borrowing rate trading at a 2011 high.<\/p>\n
In the US, it\u2019s already feeding through to government financing costs. A\u00a0mid-May auction\u00a0of 30-year Treasuries was the first since 2007 to result in an interest rate of at least 5%. Investor demand was unremarkable, even at that level.<\/p>\n
US Treasury Secretary Scott Bessent has committed to bringing down borrowing costs at a time when investor concerns over the debt level persist. The median budget deficit\u00a0estimate\u00a0of primary dealers of US Treasury securities released earlier this month showed a $1.95 trillion gap for the year ending in September and further widening to $2 trillion in 2027.<\/p>\n
\u201cYields are not just pricing inflation volatility, but increasingly the return of fiscal risk,\u201d said Laura Cooper, global investment strategist and head of macro credit at Nuveen. \u201cThere is limited capacity for bond markets to absorb the spending at current yield levels without demanding additional compensation.\u201d<\/p>\n
ADVERTISEMENT:<\/p>\n
CONTINUE READING BELOW<\/p>\n
It also might cause investors in other asset classes to rethink their allocations, insofar as they can earn a higher return by investing in government bonds. The S&P 500 stock index has soared over 7% this year, weathering the selloff in most bond markets.<\/p>\n
On Tuesday, the Russell 2000 Index, comprised of smaller companies that typically carry higher debt loads and are less profitable than their larger counterparts, was down about 1% by the end of the trading session, widening its three-day decline to 4%. The S&P 500 and Nasdaq 100 indexes also fell.<\/p>\n
\u201cThe ability of US equities to withstand the current bearish move in Treasuries is the true litmus test of the bond selloff,\u201d said Ian Lyngen, head of US interest-rate strategy at BMO Capital Markets in New York. \u201cWe suspect that if and when 30-year rates manage to reach 5.25% in the next few weeks, there will be a more durable pullback in equity valuations.\u201d<\/p>\n
What Bloomberg Strategists say\u2026<\/p>\n
\u201cOn a day where oil prices are lower on Mideast peace negotiation hopes, it\u2019s notable that US Treasuries are selling off.\u00a0It\u2019s an indication that confusion over policy and inflation outcomes will keep bonds under pressure, particularly via inflation expectations.\u201d<\/p>\n
\u2014 Edward Harrison, Macro Strategist, Markets Live<\/p>\n
\u00a9\u00a02026\u00a0Bloomberg L.P.<\/p>\n
#30year #yield #hits #highest<\/p>\n","protected":false},"excerpt":{"rendered":"
Yields on the US Treasury\u2019s longest-dated bond rose to the highest level in almost two…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[4],"tags":[12511,1941,2476,7416],"_links":{"self":[{"href":"https:\/\/stock999.top\/index.php?rest_route=\/wp\/v2\/posts\/6709"}],"collection":[{"href":"https:\/\/stock999.top\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/stock999.top\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/stock999.top\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/stock999.top\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=6709"}],"version-history":[{"count":0,"href":"https:\/\/stock999.top\/index.php?rest_route=\/wp\/v2\/posts\/6709\/revisions"}],"wp:attachment":[{"href":"https:\/\/stock999.top\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=6709"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stock999.top\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=6709"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stock999.top\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=6709"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}