Key Transaction Data: 30-Year Treasury Yield Rises to 19-Year High, Market Prices in Long-Term Risk, Macro Analysts Issued Collective Warning

BlockBeats News, August 18th, according to BIT (bit.com) market data, the 30-year U.S. Treasury bond yield rose to 5.29%, reaching its highest level since 2007. This implies that the market has significantly increased the pricing of long-term risks, intensifying concerns about inflation stickiness, the Fed maintaining high interest rates, and the sustainability of massive fiscal deficits and debt. The long-term borrowing costs for governments, businesses, and consumers have been pushed up, which usually suppresses stock market valuations and tightens global financial conditions, potentially restraining economic growth.

Castle Securities today stated that the Fed is still unwilling to tighten monetary policy, posing a broader risk to the overall market. Noshad Shah, Head of Fixed Income Sales for Europe, the Middle East, and Africa at Castle Securities, said, "In my view, this reflects the market's belief that whether it is the Fed or the Treasury Department, policymakers tend to choose the easier path when faced with difficult decisions. As long as this situation continues, it will continue to pose a risk to the entire market. The Fed's policy meeting next month will be a closely contested battle."

Michael Hartnett, Chief Investment Strategist at Bank of America, said that the imminent break of $40 trillion in U.S. debt is the core narrative of the current market, with U.S. debt interest payments reaching $1.4 trillion in the past 12 months, rapidly approaching surpassing Social Security as the federal government's largest single expense. The 30-year U.S. bond issued last week at a yield of 5.126% set a 25-year high. Hartnett pointed out that unless the 5-year U.S. Treasury yield falls below 3.25%, the deteriorating trend in interest payments will not reverse.

Renowned macro strategist and Founder of Bianco Research, Jim Bianco, warned today that despite the market's continued cooling expectations for a Fed rate hike in September, the 30-year U.S. bond yield still hit a 19-year high of 5.29%. "When bond traders can stop panicking, it's when the Fed starts to panic." Bianco believes that the long-end yield has truly peaked, and this will only occur after the Fed finally takes action to raise interest rates. The deviation between the current market and policy expectations is itself a risk signal.