Bond Yields Rise With the 30-year Near 5% Despite a Slump in Global Bonds

U.S. Treasury prices slipped on Tuesday as traders returned from the long holiday weekend to a sharp selloff in European bonds and a packed schedule of corporate debt issuance.

‍

The renewed pressure pushed benchmark yields about 5 basis points higher across the curve, setting the tone for what could be a pivotal week for interest rate expectations.

‍

Markets are bracing for a series of key economic reports, including the ISM manufacturing index later this morning and Friday’s highly anticipated August jobs report. These data points will be critical in shaping the Federal Reserve’s next steps as investors look for clarity on whether policymakers will restart an expected easing cycle in September.

‍

“The message from the bond market, both here and overseas, is clear: there’s growing concern about the economic path ahead,” said Kathy Jones, chief fixed-income strategist at Charles Schwab & Co., in an interview with Bloomberg TV. “Until we get a more coherent policy direction or evidence that the economy is slowing, the market will likely continue pricing in a higher term premium. The jobs report could be the trigger for that shift.”

‍

One of the main drivers of today’s move came from overseas, where a surge in long-term UK and European yields rippled into U.S. markets. Thirty-year bonds in Europe climbed sharply, pushing U.S. Treasury yields close to the 5% mark before buyers stepped in.

‍

The rebound was supported by several large block trades in futures markets, including a notable purchase of 10,000 contracts tied to the 10-year note. This activity helped pull yields down from their intraday highs around 9 a.m. in New York.

‍

“The 30-year is just stalling a bit near the 5% level,” said John Briggs, head of U.S. rates strategy at Natixis North America. “I don’t see that as a magical threshold, but the recent moves do raise broader concerns. Over the past couple of weeks, I’ve been increasingly worried about global long-end rates.”

‍

Briggs also noted the policy dilemma facing the Federal Reserve, warning that cutting interest rates while inflation remains elevated could lead to a steeper yield curve. “That’s a pretty simple recipe for steeper curves,” he added.

‍

Investors now have their eyes set on the upcoming economic releases, particularly Friday’s employment numbers, which could provide critical insight into whether the Fed feels confident enough to pivot toward rate cuts.

‍

For now, the bond market appears caught between persistent inflation risks and growing speculation about a slower economy later this year.

‍