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Three things that could drive it even higher
CNBC • • general
Key Points:
- The 30-year U.S. Treasury yield surged to 5.311%, its highest level since June 2007, driven by global factors including reduced foreign holdings by major countries like the U.K., China, and Japan.
- Strategists predict yields could climb further to 5.60%-5.70%, citing technical patterns and rising yields in other developed markets such as Japan, which influence U.S. long-term bond yields.
- Despite weak U.S. economic data, concerns persist that strong economic growth and loose financial conditions may prompt the Federal Reserve to continue raising interest rates, sustaining upward pressure on yields.
- Heavy Treasury issuance and inflation risks, particularly from energy prices and potential commodity shocks, contribute to investor demand for higher compensation on long-dated government debt.
- Overall, long-term Treasurys face multiple headwinds including global yield increases, robust U.S. economic activity, inflation concerns, and supply pressures, leaving little margin for error in current market pricing.
