"Yellow alert level": what the soaring government bond yields threaten the markets with

The yield on US Treasury bonds is now in the zone where it can influence almost all classes of assets, analysts warn. On the eve on long-term U.S. government bonds it exceeded the mark of 5.19%, renewing the maximum since pre-crisis 2007. Investors began selling government bonds from Friday, Ma. 15, - amid fears of a new round of inflation due to stalled negotiations between the U.S. and Iran, as well as the remaining blocked Strait of Hormuz, writes CNBC.

According to the latest data, the yield on 30-year U.S. government bonds is at 5.142%. The yield on 10-year government bonds, which are considered a key benchmark for mortgage rates, auto loans and credit card debt, is at 4.641% - during the day it jumped to 4.668% - the highest level since January 2025.

Debt markets around the world are also under pressure, with yields-including British Gilts, German Bunds and Japanese JGBs-having hit multi-year highs in recent days, MarketWatch notes.

Yields on 10-year U.S. government bonds affect rates absolutely across the spectrum, MarketWatch notes: from yields on corporate bonds issued by major technology companies, including to finance the development of artificial intelligence, to rates on mortgages, auto loans and credit cards.

- "U.S. Treasuries have firmly entered the "danger zone" - this is the level of yields on 10-year U.S. government bonds, which, as a rule, puts pressure on almost all asset classes", - said strategists HSBC, their opinion quotes CNBC. They warned: if investors start putting a higher "ceiling" on the Fed Funds rate in their forecasts, government bond yields will go further into the "danger zone". This would likely lead to a temporary drop in the value of risky assets, experts warned. So far, HSBC noted, markets have remained relatively resilient thanks to strong growth in corporate profits, the partial correction in company valuations that has already occurred, and investor expectations that the war in the Middle East will mainly be limited to the impact on the oil market.

- The current situation in the market can be considered as "yellow" rather than "red" level of alarm, says Steve Sosnick, chief strategist of Interactive Brokers. According to him, a sharper rise in government bond yields - up to 4.65% on 10-year bonds or up to 5.5% on 30-year securities - may increase tension in the markets.

- BMO Capital Markets strategist Ian Lingen agrees: further growth in debt securities could start to put more pressure on stocks, he warned. According to his assessment, if the yield on 30-year U.S. government bonds rises to 5.25% in the coming weeks, it will lead to a more sustained decline in stock prices.

- There is a risk of explosive growth of 10-year U.S. government bond yields to 6.25-6.8%, and in an extreme case - to 8.1-8.6%, says Brian LaRose, technical analyst at ICAP Technical Analysis. His opinion quotes MarketWatch. He calls this scenario "when the wheels fall off the bus". Although in the short term the risks are shifted towards the increase in yields of government bonds, the analyst noted that he is not "fully convinced" in the scenario of a sharp and sustainable breakthrough of the current indicators.

- With the exception of the resumption of shipping through the Strait of Hormuz, it is now difficult to name any short-term factor that could completely reverse the current sell-off in debt securities, according to Patrick Coffey, head of the research group at Barclays, writes Bloomberg.

This article was AI-translated and verified by a human editor