The yield on the 30-year U.S. Treasury rose more than 4 basis points to 5.311% on Monday, its highest level since June 2007, as strategists warned the selloff in long-dated government bonds could extend further.
The move came even as U.S. economic data softened: July retail sales were the weakest since May 2025, and recent labor-market figures also pointed to cooling conditions. The Treasury Department reported Monday that foreign holdings of Treasurys fell in June, with top holders U.K., China and Japan all reducing positions.
Fundstrat technical strategist Mark Newton said "long-term yields look likely to push up to 5.60%-5.70% and likely move up at a quicker pace than normal given the recent resolution of this three-year triangle pattern." Newton noted the latest jump partly originated abroad, pointing to Japan, where weaker-than-expected economic growth was accompanied by a hotter GDP deflator. "Ten-year and twenty-year JGB yields pushed higher, and it spilled right over into U.S. markets, driving the long bond to new multi-year highs," he said.
Three risks flagged by strategists
- Global repricing: BMO strategists flagged fiscal concerns across the U.S., Japan, U.K. and Europe as a possible driver of weakness in long-dated bonds, saying a global repricing of long-term borrowing costs could keep pressure on Treasury yields even if U.S. data softens further.
- Resilient U.S. growth: Deutsche Bank said markets are pricing "an unusually benign combination" of resilient growth and record-high equities, which macro strategist Henry Allen argued may be difficult to sustain, potentially raising demand and pushing central banks into faster rate hikes. Deutsche Bank's analysis suggests a CPI rate above 3% has historically corresponded with more than 100 basis points of tightening in the first year of Fed hiking cycles. The bank cited a precedent from early 2024, when the 10-year Treasury yield rose from 3.88% at the end of 2023 to a peak of 4.70% by late April as expectations for rapid Fed cuts were unwound.
- Long-duration demand: BMO noted the latest 30-year auction cleared at its highest yield since 2001, while five of the previous seven 20-year auctions had tailed, suggesting weaker demand for long-duration debt. BMO added that energy remains a potential bearish trigger for Treasurys, particularly since yields have shown little willingness to fall despite softer economic data.
Deutsche Bank also warned that "the combination of a negative hit to both growth and inflation could hit equities and bonds si[multaneously]," according to the source.
Read the original report at CNBC
