U.S. 30-Year Treasury Yield Tops 5% Amid Moody’s Downgrade and Fiscal Concerns
Rising budget deficits, waning foreign demand, and uncertainty over trade policies are fueling turbulence in the bond market, sparking broader risk aversion across global markets.
The yield on the U.S. 30-year Treasury note broke above the 5% level for the first time since April, reaching an intraday peak of 5.011%. This surge follows Moody’s recent decision to downgrade the U.S. sovereign credit rating, removing the top-tier Aaa status due to growing deficits and rising interest costs.
The last occasion when the 30-year yield touched 5% was April 9, amid the so-called “tariff tantrum” that triggered steep sell-offs in cryptocurrency and U.S. equities alike.
At that point, bitcoin (BTC) was trading near a local bottom of roughly $75,000. Since then, BTC has rallied strongly and now trades near $103,000, having reached a recent high of $106,000 on Sunday.
Jim Bianco, head of Bianco Research, noted, “The last time the 30-year Treasury closed at or above 5% was October 31, 2023. The highest closing yield recently was 5.11% on October 19, 2023—the highest since July 2007, nearly 18 years ago. The current yield is just 12 basis points shy of that record.”
Meanwhile, shifts in foreign holdings of U.S. debt continue to reshape the market landscape. In March, the United Kingdom overtook China to become the second-largest foreign holder of U.S. Treasuries with $779.3 billion, trailing only Japan, which remains the largest.
Both China and Japan have been steadily reducing their Treasury holdings over the past year, intensifying pressure on the U.S. to find new buyers for its growing debt load.
With the Treasury facing mounting deficits and the likelihood of increased bond issuance, supply is expected to rise, pushing yields higher and bond prices lower. This backdrop has contributed to a roughly 2% drop in Nasdaq futures, reflecting a broader risk-off mood in markets.
