Overview
- The 30‑year U.S. Treasury yield climbed above 5% in mid‑May, peaking around 5.19%, and has eased only slightly while long and intermediate yields remain materially higher.
- Shorter‑term yields have risen too, with the 2‑year near multi‑month highs as markets push back expectations for 2026 Fed rate cuts following Kevin Warsh’s confirmation and swearing‑in as Fed chair.
- The repricing has cut into the value of long‑duration bond assets, driving the iShares 20+ Year Treasury ETF (TLT) toward price levels last seen in 2007 and prompting some investors to reduce exposure to long bonds.
- Higher yields are already pressuring risk assets: the S&P 500‑10‑year correlation has turned sharply negative at about −0.7, equities are seeing valuation compression, and weekly outflows from U.S. spot Bitcoin ETFs have been reported.
- Investors are rotating into yield‑bearing alternatives, including tokenized Treasuries which have grown rapidly, while strategists warn that sustained yields in this range could further raise borrowing costs for consumers and businesses and stress broad asset classes.