US 30-year Treasury streak: how will 5% yields reshape global capital flows?
The historic run is forcing investors to ask whether high borrowing costs are a short-term headache or the new normal
As hopes fade for lower interest rates in the United States, 30-year Treasury yields have remained above 5 per cent for one of their longest stretches in nearly two decades, fuelling debate over whether elevated borrowing costs are here to stay or may be approaching a ceiling.
The long bond’s yield traded above 5 per cent for a 13th consecutive trading day on Thursday – the longest sustained streak since 2007. The extended duration has raised alarm among investors and analysts assessing the implications for global asset allocation, as higher risk-free yields raised the bar for equities and other riskier investments.
For Cliff Zhao, chief economist at CCB International in Hong Kong, and the bank’s global strategist Vera Jiang, yields hovering around 5 per cent were “likely to become more common” than in the past.
“While unlikely to trigger a debt crisis in the near term, persistently elevated yields could constrain room for future fiscal policy and lead investors to demand a higher long-term risk premium,” they said.