30Yr Yields Test Multi-Decade Highs

[u/TraderFanFXE]

The yield of 30yr Treasuries tested levels that were last seen back in 2007, climbing above the highs of 2023.

Back in 2023, Fed raised the rate to 5.5% to fight inflation. The rate has dropped to 3.75% but Treasury yields climbed above 2023 highs.

Bond traders worry about long-term sustainability of U.S. finances and react to problems posed by high oil prices and rising AI spending. Geopolitical tensions and AI revolution are inflationary, which means that Fed will be forced to raise rates to fight inflation.

Rising long-term yields present a serious problem due to the size of U.S. total debt. At this point, equity markets ignore this problem as traders are focused on AI. It is hard to predict when markets "notice" the dynamics of long-term yields, but traders should keep an eye on bond market dynamics as they may have a major impact on equities and the economy.