For the first time since before the Global Financial Crisis, investors can earn 5% yields on 30-year US Treasuries.
The last time this happened, the iPhone had just launched and most people had never heard of a mortgage-backed security. That was 2007.
Then came the GFC. Then ZIRP. Then a pandemic that pushed rates to the floor and lured investors into long-duration bonds.
Now the tide has turned, and the bond market is being very clear: This isn’t a blip. This is a repricing.
It’s being driven by rising energy prices and broader inflationary pressures that are reshaping long-term expectations.
Also, recent Treasury auctions have shown softer demand, with investors looking for higher yields to absorb growing government debt.
And markets are increasingly questioning whether the Fed is truly done tightening rates this year.
For investors, higher income opportunities now exist that simply weren’t available for over a decade. But duration risk is real, and uncertainty around the rate path is significant.
Persistent, energy-driven inflation could push yields even higher. It’s something to keep an eye on.
