US 30-year Treasury yields remained above 5% for 15 consecutive trading days as of local time May 27, marking the longest such streak since 2007, according to Yonhap Infomax overseas interest rate data. CCB International Chief Economist Zhao Cliff and Global Strategist Zhang Bella stated that situations where 30-year Treasury yields move around 5% are likely to become much more common than in the past. The analysts explained that while short-term Treasury yields are primarily influenced by Federal Reserve monetary policy outlook, long-term Treasury yields increasingly reflect concerns about US fiscal health, particularly following passage of President Donald Trump's 'One Big Beautiful Bill Act' which expanded tax cuts and defense and border security spending.
CCB International Links Long-Term Rate Rise to Fiscal Debt Burden
CCB International's Zhao stated that while the likelihood of a fiscal crisis in the short term is not large, high interest rates in the long term can constrain fiscal policy operating room and cause investors to demand higher long-term risk premiums. The analysts noted that US national debt burden has grown following passage of the 'One Big Beautiful Bill Act', increasing the risk premium for holding long-term Treasuries.
BEA Cites Middle East Geopolitical Risks and Tariff Uncertainty
Bank of East Asia (BEA) Investment Strategist Bosco Wu diagnosed that increased defense spending due to the US-Iran war and uncertainty in tariff revenue are applying upward pressure on long-term Treasury yields. Wu stated that the current 30-year Treasury yield level of 5.1-5.2% is approaching the upper end of his forecast range, and additional upside will be limited unless inflation rises significantly again and the Fed takes a more hawkish stance.
DWS Economist States No Policy Change Reason at Upcoming FOMC
DWS Chief US Economist Christian Scherrmann stated that current economic indicators alone provide no reason to change the policy rate at the next FOMC meeting. The market is placing weight on the possibility that the Fed will hold the base rate at the Federal Open Market Committee (FOMC) meeting opening this week.
CCB International Outlines Investment Implications Across Asset Classes
CCB International assessed that the investment appeal of cash, money market funds (MMF), and short-term US Treasuries has increased, while long-term Treasuries offer high yields but have increased volatility. The firm forecasted that in the stock market, the relative appeal of companies generating stable earnings and cash flow will increase, while growth stocks relying on high valuations and borrowing will face greater burden.
FAQ
What caused US 30-year Treasury yields to stay above 5% for 15 consecutive days?
CCB International analysts stated that long-term Treasury yields increasingly reflect concerns about US fiscal health following passage of Trump's 'One Big Beautiful Bill Act', which expanded tax cuts and defense and border security spending. BEA also cited increased defense spending due to the US-Iran war and tariff revenue uncertainty as factors applying upward pressure.
What did DWS say about the upcoming FOMC meeting?
DWS Chief US Economist Christian Scherrmann stated that current economic indicators alone provide no reason to change the policy rate at the next FOMC meeting. The market is placing weight on the possibility that the Fed will hold the base rate at the meeting opening this week.
