US stock markets are under pressure as bond yields rise. The 30-year Treasury bond rate was in the thick of action, rising above 5%, while the 10-year yield also rose above 4.5%. Stock market investors are concerned about the rise in yields and leading to sell-off in the US stocks.
Rising yields suggest that investors are demanding higher returns to hold US government debt, mainly due to worries about the country’s long-term financial health.
These concerns grew after Thursday’s $16 billion auction of 20-year Treasury bonds, where the US government had to offer higher yields to attract buyers.
The recently passed federal budget, which contains tax cuts and higher defense expenditure, has fueled fears that the US national debt would climb even further. The impact of Trump tariffs is yet to play out in the economy. As a result, investors are reevaluating their strategy.
Normally, US government bonds are deemed ‘risk-free,’ allowing the government to borrow at lower rates. However, with higher yields available on these safe assets, many investors are moving their money away from equities into bonds.
This shift has already impacted the stock market, which is down about 1% since bond yields began climbing. Higher bond yields also point to rising interest rates, which can hurt consumers, businesses, and the broader economy.
“I wonder whether we could be getting close to the beginning of a classic ‘bonds break stocks, until stocks break so much that they fix bonds again’ cycle,” says Michael Brown, Senior Research Strategist at Pepperstone.
Some market analysts now expect the US Federal Reserve to intervene and change bank rules, notably the Supplementary Leverage Ratio (SLR), to relieve pressure and calm bond markets.
Also, keep an eye on the US dollar index; it’s back below 100 and looking weak at current levels.
Nigel Green, CEO, deVere Group shares his views: (Excerpts)
Yields on 30-year Treasuries have surged past 5%, and demand is thinning fast. The most decisive resistance to Trump’s economic plans isn’t coming from lawmakers or lobbyists. It’s coming from investors.
The breakdown of trust is already sending tremors through the financial system. This week’s 20-year Treasury auction drew weak demand, and stocks tumbled alongside bonds.
The arithmetic is ugly. Moody’s just stripped the US of its final Aaa credit rating, following similar actions by Fitch and S&P. America’s debt is now projected to hit 134% of GDP within a decade, and investors are waking up to the implications.
This isn’t a temporary blip. Three downgrades in 14 years is not a coincidence—it’s a verdict.
The verdict is about more than numbers. It’s about leadership.
Trump’s “One Big Beautiful Bill” is a jumbled mix of tax cuts targeting key voter groups—hourly workers, retirees, car buyers—offset by vague promises of future savings. The idea of a balanced budget, once central to Republican fiscal identity, has been quietly abandoned.
Higher Treasury yields mean higher borrowing costs across the board—for mortgages, for businesses, for the government. The average American will feel it in rising loan repayments and shrinking investment returns.
And yet, this pressure might offer one faint sliver of hope.
If there’s one force this administration might still respond to, it’s the bond market. We’ve seen it before—when yields spike, policy changes follow.
In April, a sudden jump in yields after tariffs went live prompted an overnight policy U-turn. Trump blinked. He suspended most of the measures just hours after announcing them. Not because of political backlash, but because markets pushed back.
The bond market is the only mechanism left with the strength to apply pressure. And crucially, it’s the one pressure point this White House sometimes takes seriously.
With Senate negotiations due to start in June, the coming weeks will reveal whether the fiscal damage can still be contained or whether this chapter of economic fiction becomes permanent.
Markets are no longer responding to spin. They’re responding to structure—and the structure is collapsing.
The US built its financial supremacy on trust and predictability. That trust is cracking. When investors start demanding a premium just to lend to the world’s largest economy, the game has already changed.