Global Bond Selloff Accelerates: US 30-Year Yield Hits 2007 High

A coordinated global bond selloff is now in full force, with yields spiking across all major markets amid intensifying inflationThe rate at which prices rise across an economy. concerns tied to Middle East supply disruptions and war-driven commodity shocks. The US 30-year Treasury yield reached 5.11 percent, the highest level since May 2025 and approaching 2007 highs, while shorter-durationBond price sensitivity to interest rate changes. bonds have also felt acute selling pressure. This represents a sharp pivot from the risk-on sentiment that dominated markets in early May, when mega-cap tech and AI enthusiasm drove the S&P 500 and Nasdaq to new record highs.

The catalyst is multifaceted: oil prices have climbed on Iran supply concerns, with forecasters slashing demand growth expectations to levels not seen since the Covid pandemic. Simultaneously, Q1 earnings data revealed stronger-than-expected pricing power across sectors, and the Conference Board is signaling prolonged inflationThe rate at which prices rise across an economy. ahead. JPMorgan Asset Management's Kay Herr and Columbia Threadneedle's Ed Al-Hussainy both highlighted that "bond vigilantes are back," a reference to investors who sell bonds when central banks fall behind the curve on inflation. The bond market is effectively pricing in a higher-for-longer rate environment, with traders now betting the Federal Reserve will hold rates elevated or even raise them further, contradicting earlier market consensus for springFalse breakdown below an accumulation range low, immediately reversed. The institutional liquidity grab before markup begins. cuts.

This yield spike is creating a structural headwind for equities, particularly the mega-cap technology names that led the May rally. Higher risk-free rates mechanically depress valuation multiples on growth stocks, and rising yields make bonds more attractive relative to equities on a risk-adjusted basis. The S&P 500 and Nasdaq both sold off sharply on May 15, with semiconductors suffering acute pressure, AMD fell 3.3 percent, NVIDIA dropped 2.2 percent, as bond competition for capital intensified. The Russell 2000 showed modest outperformance, suggesting a rotation away from expensive growth toward more value-oriented equities. UBS's Ulrike Hoffman-Burchardi noted that after a decade of passive mega-cap dominance, active managers now have an opportunity, but that opportunity is conditional on yields stabilizing.

The forward risk is acute: if yields breach 5 percent on the 10-year, RBC strategist Lori Calvasina warned that bullish equity calls face a structural challenge. Bank of America strategists flagged June as ripe for profit-taking given crowded long positioning in equities and this new inflationThe rate at which prices rise across an economy. dynamic. The bond market decline also threatens leveraged positions in credit and private markets, with JPMorgan noting private credit is seeing volatility and potential forced selling. Fed Chair Kevin Warsh is inheriting an economy where inflation risks and financial conditions are tightening simultaneously, a regime that will test his credibility on the inflation side.