On Monday, the 30-year US Treasury yield crossed 5.19% its highest level since July 2007, nearly 19 years ago. The last time long-term borrowing costs sat this high, Bear Stearns was still solvent and the phrase "subprime crisis" hadn't yet entered the public vocabulary. That context is worth sitting with for a moment.
Bond yields don't move like this without a reason. In this case, several are converging at once.
What's Driving the Selloff
The most immediate pressure is inflation. Consumer prices rose to a three-year high in April, and with oil elevated by an ongoing US-Iran standoff, the path back to the Fed's 2% target looks longer than it did six months ago. When inflation expectations rise, long-term bondholders demand higher yields to compensate and that's exactly what's happening.
