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The 30-year U.S. Treasury yield hits the longest "5% record" since the financial crisis, and the market re-examines U.S. debt risks

2026-07-22·newswire-us-stock-235001
The 30-year U.S. Treasury yield hits the longest "5% record" since the financial crisis, and the market re-examines U.S. debt risks.

The yield on the 30-year U.S. Treasury bond continues to remain above 5%, the longest period since the 2007 financial crisis, reflecting continued market concerns about the expanding U.S. fiscal deficit and the resilience of inflation. Data shows that since the beginning of this year, the U.S.

30-year Treasury bond yield has been higher than 5% for 27 trading days, accounting for about 19% of all trading days, hitting the highest level since 2007. That year, the yield was higher than 5% on 50 trading days.

It is worth noting that compared with 2007, the current Fed's benchmark interest rate is still about 150 basis points lower, which means that investors require higher risk compensation for holding U.S. ultra-long-term Treasury bonds, highlighting the market's increasing concerns about long-term fiscal risks.

Industry insiders believe that the main factors driving long-term Treasury yields to continue to rise include the deterioration of the U.S. fiscal situation and the huge financing needs brought about by AI infrastructure construction, which together push up long-term capital costs.

Tony Rodriguez, head of fixed income strategy at Nuveen Asset Management, said that the United States' huge sovereign debt and fiscal deficit are continuing to push up long-term interest rates. Data show that since 2007, the size of the U.S.

Treasury market has expanded from approximately US$4.5 trillion to approximately US$31 trillion, and the proportion of government debt to GDP has also increased from approximately 50% to over 100%. Long-term fiscal spending expansion has pushed U.S. annual interest payments past $1 trillion.

Although the debt scale of major economies around the world has generally increased since the COVID-19 epidemic, with the exception of the United Kingdom, the yield on 30-year U.S. Treasury bonds is currently higher than that of major developed economies such as Japan and France. Fitch Ratings also recently warned that the U.S.

debt burden is much higher than other countries with AA ratings. Hoisington Investment Management, a long-term bull on U.S. Treasuries, also rarely changed its stance this month. The agency said that larger fiscal deficits and continued growth in capital needs pose new structural pressures that may keep inflation and long-term Treasury yields high.

At the same time, the rapid expansion of the AI industry is further intensifying competition in the long-term financing market. The market estimates that the scale of financing related to AI infrastructure has exceeded US$500 billion, and the surge in corporate bond issuance is competing with US Treasury bonds for long-term funding sources.

Alex Payne, senior portfolio manager at Vanguard Capital Management, said that whenever the 30-year Treasury bond yield rose to around 5% in the past few years, the market would quickly see buying orders.

But now traditional long-term funds such as pension funds and insurance companies have more investment options, so yields above 5% may become the new normal, and the current yield may not have peaked yet.

Rodriguez also pointed out that whether it is the government, hyperscale cloud service providers or other companies, they are now competing for the same investors in the long-term bond market, and financing competition has significantly intensified. As of Wednesday, the U.S.

30-year Treasury bond yield is expected to remain above 5% for 12 consecutive trading days, exceeding the record of 11 consecutive trading days in May this year. At that time, the yield rose to 5.2%, the highest level since 2007. At the same time, the U.S.

30-year real yield (after inflation adjustment) has risen by about 50 basis points this year, approaching 3%, reaching the highest level since 2008. Although the U.S.

Treasury Department has relied more on short-term Treasury bill financing in recent years and has kept the scale of long-term Treasury bond issuance relatively stable, most primary dealers on Wall Street predict that the U.S.

Treasury Department will increase the scale of interest-bearing Treasury bond auctions from 2 to 30 years starting in May 2027 at the earliest to meet growing financing needs.

Kevin Flanagan, director of investment strategy at WisdomTree, said that when assessing the value of long-term government bonds, fiscal deficits, debt size and the possible increase in future government bond issuance are all important factors that cannot be ignored. In contrast, although the 2- to 10-year U.S.

Treasury bond yields have rebounded recently, they have only returned to levels near the beginning of 2025. Currently, most institutional investors prefer to allocate 5- to 7-year government bonds to reduce the price risk caused by further increases in long-term interest rates.

Hank Smith, head of investment strategy at Haverford Trust, said the company currently will not allocate U.S. Treasury bonds with a maturity of more than 10 years for non-tax-exempt clients and has increased its allocation of short-term U.S. debt. He pointed out that clients have been focused on U.S.

debt issues over the past 20 years, and the bond market will ultimately tell investors whether debt has become a real risk. Smith warned that although the demand for U.S.

Treasury bond auctions has not yet worsened significantly, if fiscal problems continue to simmer and "Bond Vigilantes" return to the market, they may become one of the biggest risks facing the stock and bond markets in the future.

#Stocks #AI #Fed #Bonds

Full text

The 30-year U.S. Treasury yield hits the longest "5% record" since the financial crisis, and the market re-examines U.S. debt risks

The yield on the 30-year U.S. Treasury bond continues to remain above 5%, the longest period since the 2007 financial crisis, reflecting continued market concerns about the expanding U.S. fiscal deficit and the resilience of inflation. Data shows that since the beginning of this year, the U.S. 30-year Treasury bond yield has been higher than 5% for 27 trading days, accounting for about 19% of all trading days, hitting the highest level since 2007. That year, the yield was higher than 5% on 50 trading days. It is worth noting that compared with 2007, the current Fed's benchmark interest rate is still about 150 basis points lower, which means that investors require higher risk compensation for holding U.S. ultra-long-term Treasury bonds, highlighting the market's increasing concerns about long-term fiscal risks. Industry insiders believe that the main factors driving long-term Treasury yields to continue to rise include the deterioration of the U.S. fiscal situation and the huge financing needs brought about by AI infrastructure construction, which together push up long-term capital costs. Tony Rodriguez, head of fixed income strategy at Nuveen Asset Management, said that the United States' huge sovereign debt and fiscal deficit are continuing to push up long-term interest rates. Data show that since 2007, the size of the U.S. Treasury market has expanded from approximately US$4.5 trillion to approximately US$31 trillion, and the proportion of government debt to GDP has also increased from approximately 50% to over 100%. Long-term fiscal spending expansion has pushed U.S. annual interest payments past $1 trillion. Although the debt scale of major economies around the world has generally increased since the COVID-19 epidemic, with the exception of the United Kingdom, the yield on 30-year U.S. Treasury bonds is currently higher than that of major developed economies such as Japan and France. Fitch Ratings also recently warned that the U.S. debt burden is much higher than other countries with AA ratings. Hoisington Investment Management, a long-term bull on U.S. Treasuries, also rarely changed its stance this month. The agency said that larger fiscal deficits and continued growth in capital needs pose new structural pressures that may keep inflation and long-term Treasury yields high. At the same time, the rapid expansion of the AI industry is further intensifying competition in the long-term financing market. The market estimates that the scale of financing related to AI infrastructure has exceeded US$500 billion, and the surge in corporate bond issuance is competing with US Treasury bonds for long-term funding sources. Alex Payne, senior portfolio manager at Vanguard Capital Management, said that whenever the 30-year Treasury bond yield rose to around 5% in the past few years, the market would quickly see buying orders. But now traditional long-term funds such as pension funds and insurance companies have more investment options, so yields above 5% may become the new normal, and the current yield may not have peaked yet. Rodriguez also pointed out that whether it is the government, hyperscale cloud service providers or other companies, they are now competing for the same investors in the long-term bond market, and financing competition has significantly intensified. As of Wednesday, the U.S. 30-year Treasury bond yield is expected to remain above 5% for 12 consecutive trading days, exceeding the record of 11 consecutive trading days in May this year. At that time, the yield rose to 5.2%, the highest level since 2007. At the same time, the U.S. 30-year real yield (after inflation adjustment) has risen by about 50 basis points this year, approaching 3%, reaching the highest level since 2008. Although the U.S. Treasury Department has relied more on short-term Treasury bill financing in recent years and has kept the scale of long-term Treasury bond issuance relatively stable, most primary dealers on Wall Street predict that the U.S. Treasury Department will increase the scale of interest-bearing Treasury bond auctions from 2 to 30 years starting in May 2027 at the earliest to meet growing financing needs. Kevin Flanagan, director of investment strategy at WisdomTree, said that when assessing the value of long-term government bonds, fiscal deficits, debt size and the possible increase in future government bond issuance are all important factors that cannot be ignored. In contrast, although the 2- to 10-year U.S. Treasury bond yields have rebounded recently, they have only returned to levels near the beginning of 2025. Currently, most institutional investors prefer to allocate 5- to 7-year government bonds to reduce the price risk caused by further increases in long-term interest rates.

Hank Smith, head of investment strategy at Haverford Trust, said the company currently will not allocate U.S. Treasury bonds with a maturity of more than 10 years for non-tax-exempt clients and has increased its allocation of short-term U.S. debt. He pointed out that clients have been focused on U.S. debt issues over the past 20 years, and the bond market will ultimately tell investors whether debt has become a real risk. Smith warned that although the demand for U.S. Treasury bond auctions has not yet worsened significantly, if fiscal problems continue to simmer and "Bond Vigilantes" return to the market, they may become one of the biggest risks facing the stock and bond markets in the future.

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