The recent rapid rise in US Treasury yields warrants attention, but the current situation resembles more the "supply shock + high-interest-rate repricing" scenario of 2022-2023 than a situation where the bond market has spiraled out of control. The core issue is not whether the 10-year yield has broken through 5%, but rather that the market has yet to see a clear mechanism to end the sell-off.
Currently, high oil prices, resilient US economic data, and limited room for Fed rate cuts, coupled with competition for long-term funds from fiscal financing, AI, and data center capital expenditures, further drive up real interest rates and term premiums. In this environment, even with already high yields, the market will continue to seek higher equilibrium rates as long as the economy and credit system can withstand the pressure.
These bond sell-offs typically end in two ways: first, a significant external disruption, such as a rapid deterioration in employment, a surge in credit spreads, deleveraging of risky assets, or liquidity pressures on financial institutions; second, a market consensus that "yields are already high enough," leading long-term funds to actively increase duration.
Neither of these signals is currently clear enough. Therefore, the more important thing is not to guess whether the 10-year yield will eventually reach 5.2% or 5.4%, but to observe whether high interest rates begin to trigger credit deterioration and a non-linear tightening of financial conditions. The former is still normal repricing, while the latter signifies a true market breakdown.
