A Global Aversion For Long Duration

2025-05-29 14:59:00 ET

Summary

• The recent spike in U.S. 30-Year bond yields reflects investor concerns over long-term debt sustainability and fiscal policy shifts.
• Rising 30-Year yields in other major economies like Germany and Japan point to a global aversion to long duration, not just a U.S.-specific issue.
• Despite current volatility, 5% yields may represent a return to historical norms rather than a sign of runaway risk.

By Kevin Flanagan

Last week, the U.S. Treasury ((UST)) market witnessed a rather volatile period of trading activity. Of course, things got started with the market digesting the news of Moody’s “one-notch” downgrade of the U.S. credit rating , which was then followed up with news that the House of Representatives had passed the “big, beautiful bill” pertaining to potential future fiscal policy. These two events put tariff-related concerns on the back burner and raised investor anxieties about swelling deficits and increased supply, i.e., debt sustainability....

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