Treasury Yields Could Hit 6% As The Global Bond Sell-Off Gathers Speed
The world's most important borrowing rate is racing towards 6%, a level unseen since 2000, and the shockwaves could impact stocks, credit and household budgets, warns the CEO of deVere Group, one of the world's largest independent financial advisory organisation.
The comments from Nigel Green come as the 10-year Treasury yield punches above 5.35%, its highest since April 2002, while the 30-year yield touches 5.73%.
AdvertisementThe speed of the climb is striking. In early August, the 10-year yield stood at 4.70%. A year ago it was 4.13%. The third quarter delivered the biggest quarterly rise this century.
Supply sits at the heart of it. US national debt now stands at roughly $40.1 trillion. The federal deficit is projected at $1.9 trillion for fiscal 2026, around 5.8% of GDP, while net interest costs top $1 trillion.
In August, the Treasury doubled its long-bond buybacks to $4 billion to steady the market. The 30-year yield has risen since.
Inflation is adding fuel as soaring energy costs and the AI boom are lifting growth and prices, with Federal Reserve officials pointing to AI demand as a source of upward pressure. Markets price around 85% odds of a December rate hike, and the 10-year real yield on inflation-protected Treasuries sits near 2.9%.
The deVere CEO says the safe haven has turned volatile.
Some leading bond managers argue yields already offer good value. Even they accept a sharp near-term spike is feasible as leveraged funds are forced to dump losing positions.
Equities have shrugged it off so far, with major US stock indexes notching record highs this week. Industry voices suggest a move to 5.5% would bring meaningful weakness across credit and equity markets.
Households are already paying. Mortgage rates have climbed to their highest since November 2023. This week's $39 billion 10-year auction cleared at 5.3%, the highest for a 10-year sale since November 2000, though demand proved strong.
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