ME News report, on August 18 (UTC+8), according to BIT (bit.com) market data, the yield on 30-year U.S. Treasury bonds rose to 5.29%, reaching its highest level since 2007, signaling a significant increase in market pricing of long-term risks and intensifying concerns over persistent inflation, the Federal Reserve’s commitment to high interest rates, and the sustainability of massive fiscal deficits and debt. Higher long-term borrowing costs for governments, corporations, and consumers typically suppress stock valuations and tighten global financial conditions, potentially restraining economic growth. Citadel Securities today stated that the Fed remains reluctant to tighten monetary policy, posing broader risks to the overall market. Noshad Shah, Head of Fixed Income Sales for Europe, the Middle East, and Africa at Citadel Securities, said: “In my view, this reflects the market’s belief that, whether at the Fed or the Treasury, policymakers tend to choose the easier path when faced with difficult decisions. As long as this persists, it will continue to pose risks across the entire market. Next month’s Fed policy meeting will be a closely contested battle.” Bank of America’s Chief Investment Strategist, Michael Hartnett, stated that the U.S. Treasury debt approaching $40 trillion is the central narrative of today’s market. Over the past 12 months, U.S. debt interest payments have reached $1.4 trillion and are on track to surpass Social Security as the federal government’s largest single expenditure. Last week, the 30-year Treasury yield hit a 25-year high of 5.126% at auction. Hartnett noted that the trend of worsening interest expenses will not reverse unless the 5-year Treasury yield falls below 3.25%. Renowned macro strategist and founder of Bianco Research, Jim Bianco, warned today that despite declining market expectations for a Fed rate hike in September, the 30-year Treasury yield still hit a 19-year high of 5.29%. “Bond traders can stop panicking when the Fed starts panicking,” Bianco said, arguing that long-term yields will only truly peak after the Fed ultimately acts with a rate hike. The current divergence between market pricing and policy expectations itself constitutes a risk signal. (Source: BlockBeats)
30-Year U.S. Treasury Yield Reaches 19-Year High; Analysts Warn of Macroeconomic Risks
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Summary
Bitcoin’s macro correlation increases as the 30-year U.S. Treasury yield reaches 5.29% on August 18, the highest level since 2007. Analysts warn of macro risks stemming from inflation, Fed policy, and rising debt costs. CFT measures may come under pressure as long-term yields rise. Castle Securities and BofA’s Michael Hartnett highlight market risks from fiscal deficits and $1.4 trillion in annual interest expenses. Jim Bianco notes that yields may peak after additional rate hikes.
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