The wave of bond sell-offs has pushed the yield on a key US Treasury bond close to the 5% mark, increasing Wall Street and even Washington's concerns about rising borrowing costs impacting the US economy. Strong oil prices are likely to bring about a new wave of inflationary shocks. Coupled with the Trump administration's attempt to ease pressure on the government bond market but to no avail, the 10-year US Treasury yield rose to 4.97% at the end of last week. This is only one step away from the high in October 2023, when the yield briefly broke through 5% in a single trading day, then buyers flocked into the market, and only then did the yield fall. The recent sharp fall in the bond market also put Federal Reserve Chairman Kevin Walsh under greater pressure before the central bank meeting on Wednesday. Data released on Friday showed that consumer prices rose more than expected last month, and speculation was rampant that policymakers would start raising interest rates and curb inflation above the target for five consecutive years. The bond market did not stabilize until the data was released. “The Federal Reserve is definitely half slow,” said Tracy Chen, portfolio manager at Brandywine Global Asset Management. She said that in the medium term, yields will rise. She said that the reason is that some of the factors that drive long-term returns, such as the inflationary effect brought about by the Iran war, are not within the control of decision makers. “I don't know how high it will rise, but I think it will definitely be over 5%.”

The wave of bond sell-offs has pushed the yield on a key US Treasury bond close to the 5% mark, increasing Wall Street and even Washington's concerns about rising borrowing costs impacting the US economy. Strong oil prices are likely to bring about a new wave of inflationary shocks. Coupled with the Trump administration's attempt to ease pressure on the government bond market but to no avail, the 10-year US Treasury yield rose to 4.97% at the end of last week. This is only one step away from the high in October 2023, when the yield briefly broke through 5% in a single trading day, then buyers flocked into the market, and only then did the yield fall. The recent sharp fall in the bond market also put Federal Reserve Chairman Kevin Walsh under greater pressure before the central bank meeting on Wednesday. Data released on Friday showed that consumer prices rose more than expected last month, and speculation was rampant that policymakers would start raising interest rates and curb inflation above the target for five consecutive years. The bond market did not stabilize until the data was released. “The Federal Reserve is definitely half slow,” said Tracy Chen, portfolio manager at Brandywine Global Asset Management. She said that in the medium term, yields will rise. She said that the reason is that some of the factors that drive long-term returns, such as the inflationary effect brought about by the Iran war, are not within the control of decision makers. “I don't know how high it will rise, but I think it will definitely be over 5%.”