Key Transaction Data: 30-Year Treasury Yield Rises to 19-Year High, Market Prices in Long-Term Risk, Macro Analysts Issued Collective Warning

August 18th. According to BIT (bit.com) market data, the 30-year US Treasury bond yield rose to 5.29%, hitting the highest level since 2007. This signifies that the market has significantly raised its pricing for long-term risks, with increasing concerns about inflation stickiness, the Federal Reserve maintaining high interest rates, and the sustainability of massive fiscal deficits and debt. The long-term borrowing costs for governments, businesses, and consumers have been pushed up, which usually suppresses stock market valuations and tightens global financial conditions, potentially restraining economic growth.

Castle Securities commented on this today, stating that the Federal Reserve is still unwilling to tighten monetary policy, posing a broader risk to the overall market. Castle Securities' Head of Fixed Income Sales for Europe, the Middle East, and Africa, Noshad Shah, said, "In my view, this reflects the market's belief that whether it is the Federal Reserve or the Treasury Department, policymakers tend to choose the easier path when faced with tough decisions. As long as this situation persists, it will continue to pose a risk to the entire market. The Federal Reserve's policy meeting next month will be a closely contested battle."

Bank of America's Chief Investment Strategist, Michael Hartnett, stated that the imminent breach of $40 trillion in US debt is the core narrative of the current market. In the past 12 months, US debt interest payments have reached $1.4 trillion, nearing surpassing Social Security to become the federal government's largest single expenditure. Last week, the 30-year US bond issuance at a 5.126% yield hit a 25-year high. Hartnett pointed out that unless the 5-year US bond yield falls below 3.25%, the deteriorating trend in interest payments will not reverse.

Renowned macro strategist and founder of Bianco Research, Jim Bianco, warned today that despite the continuous cooling of market expectations for a September rate hike by the Federal Reserve, the 30-year US Treasury bond yield still hit a 19-year high of 5.29%. "When bond traders can stop panicking, it is when the Federal Reserve starts panicking." Bianco believes that the long-end yield will truly peak only after the Federal Reserve finally takes action to raise interest rates, and the divergence between the current market and policy expectations in itself is a risk signal.