Treasury Yields Near 5% as Global Bond Selloff Intensifies

The global bond market is facing a dramatic reset as yields surge across major economies, led by the $28 trillion US Treasury market. Just days into 2025, yields have climbed significantly, with the 10-year Treasury rate rising over a percentage point in four months and approaching the symbolic 5% level. This bond market “tantrum” reflects multiple pressures: surprisingly robust economic data, reduced expectations for Fed rate cuts, and growing concerns about US fiscal policy ahead of Trump’s return to the White House. The implications are far-reaching, affecting everything from mortgage rates and corporate borrowing costs to stock market sentiment. Adding to market anxiety is the unusual disconnect between Fed policy and market yields, as rates continue rising even after the Fed began its easing cycle in September. With fiscal deficits projected to exceed 6% of GDP and expectations of Trump’s growth-focused policies potentially expanding deficits further, some analysts warn of the return of “bond vigilantes” who may force a reckoning over fiscal policy.