The U.S. Treasury sold $25 billion of 30-year bonds on Wednesday at a yield of 5.05%. This marks the first time since 2007 that yields on these bonds have exceeded 5%, highlighting mounting investor unease.
The spike is attributed to reports of higher inflation stemming from the war with Iran. Inflation signals continued to muddy interest rate expectations through Friday, leading to further spikes in Treasurys.
These market conditions arrive as the Senate confirmed Kevin Warsh as the next chair of the Federal Reserve. The head of research for Societe Generale Americas noted that a bond market spooked by fears of accelerating inflation will be an early test for the incoming chair.
In response to the economic climate, bond traders are hoping the central bank's easing bias is replaced with a skewed view toward tightening.