Recent selling pressure in US government bonds has driven 30-year yields to multi-decade highs, and this downturn may soon achieve another milestone: a majority of respondents in the latest Markets Pulse poll anticipate the benchmark 10-year Treasury yield will soon climb past 5%. Of the 392 participants who responded to this week's survey, two-thirds expect the 10-year yield to cross that pivotal threshold before the year concludes. The yield has rarely traded above 5% since 2007.
About 38% of respondents predict the breakthrough will occur in the fourth quarter, while another 28% expect it to happen this month or next. The proportion of survey participants anticipating a rise in the 10-year yield over the next month has also reached its highest level in four years. On Wednesday morning in New York, the 10-year Treasury yield stood at 4.65%, down from a peak of 4.75% touched earlier this week. Treasury prices received a boost earlier in the day following an unexpected announcement from the US Treasury Department regarding an expansion of its long-dated bond repurchase program.
The Treasury's Wednesday move, disclosed one day after the Markets Pulse survey concluded, is viewed as a response to rising yields. Over the past 19 years, the 10-year yield has only briefly exceeded 5%, most notably during the S&P 500 correction in October 2023. The 30-year Treasury yield recently traded at 5.20%, with nearly 60% of survey participants indicating they do not expect it to reach 6% this year.
This poll represents the latest evidence that investors are preparing for higher long-term borrowing costs, which could ripple through the economy and elevate financing expenses across mortgages, corporate debt, and consumer loans. The decline in US Treasuries mirrors similar trends in bond markets of other major economies, reflecting a range of concerns: persistent inflation amid rising energy costs driven by conflicts, doubts about the Federal Reserve's strategy, and the US national debt approaching $40 trillion.
Another contributing factor is the substantial bond issuance by hyperscale cloud providers financing artificial intelligence infrastructure. There are also worries that Treasury holders are shifting from official institutions to more volatile private-sector investors. Over three-fifths of respondents believe that no factor, including robust economic growth or a sharp inflation surge, will significantly reduce the US debt-to-GDP ratio, and they expect the situation to deteriorate until it triggers a major crisis.
Ruben Hovhannisyan, fixed-income portfolio manager at TCW Group, commented: "Given the fiscal situation, we think it will be very difficult to restore order, and combined with elevated volatility, we are not very optimistic about the long end of the yield curve." He prefers shorter-dated bonds over longer maturities. Following this week's turbulent swings in the 30-year yield, the Treasury Department announced it would "at least double" the size of its buyback operations for 10- to 30-year bonds.
Strategist perspective: "The buyback adjustment sends a clear signal that the Treasury is monitoring long-term yields and is concerned about them. However, this increase in flow size alone is insufficient to reverse the selloff in long bonds, though the signal may be enough to prompt more short covering."
Survey participants appeared evenly split on whether they are more worried about hyperscaler bond issuance weakening demand for Treasuries, or about rising Treasury yields impacting hyperscaler bond issuance. This reinforces the view that these two markets are caught in a feedback loop. Investment-grade corporate issuance has reached nearly $1.5 trillion this year, a 36% increase from the same period last year. Nomura estimates that issuance from the largest tech companies alone, around $200 billion, represents approximately 25% of the Treasury's net long-term debt sold to private investors, a fivefold increase from 2025 levels.
The vast majority of survey respondents do not believe there is a specific threshold for Treasury yields that would begin to drag on the dollar once crossed. Instead, they view dollar movements as more dependent on the speed of the bond selloff and real yields. Despite significantly higher Treasury yields, the Bloomberg Dollar Spot Index has remained largely flat this year. Over 60% of respondents also indicated that US government willingness to help Japan support the yen has increased their concerns about the Treasury market, given Japan's position as the largest foreign holder of US government debt.
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