US 30-Year Treasury Yield Hits 2007 High, Bond Rout Deepens Global Selloff

The bond market experienced a historic repricing on May 15 as the US 30-year Treasury yield hit 5.11 percent, its highest level since May 2025 and approaching 2007 highs. This global bond rout was synchronized across geographies, with gilts, bunds, JGBs, and other sovereigns all selling off sharply. The catalyst was a confluence of factors: persistent inflationThe rate at which prices rise across an economy. expectations, war-driven oil price shocks (Iran tensions), and the confirmation that central banks face a regime change with Powell's tenure ending and Warsh taking the Fed chair.

Equity markets buckled under the weight of rising real yields. The S&P 500 and Nasdaq closed Friday lower, ending a weeks-long rally that had been built on AI and mega-cap momentumThe empirical fact that winners keep winning over the medium term.. Semiconductor names (NVDA, AMD) declined 2-3 percent as China announced restrictions on US chip purchases, and this ripple coincided with the broader selloff. The Russell 2000 outperformed, rising 0.7 percent while the Nasdaq fell 1.3 percent, signaling a rotation out of rate-sensitive growth stocks into value and small-caps. The tape showed yields were doing the heavy lifting; breadth compression was evident.

The macro narrative hinges on central bank policy optionality evaporating. With inflationThe rate at which prices rise across an economy. re-emerging as a threat and oil prices elevated, the Fed and other central banks face a choice between two regime shifts: either raise rates to contain price pressures, or tolerate higher inflation and accept the fiscal cost. SocGen's Albert Edwards and others warned of double-digit inflation returning, which would force central banks to abandon the cutting-cycle narrative that had underpinned the first quarter rally. JPMorgan strategists noted "bond vigilantes are back," and RBC's Calvasina flagged that a 5 percent 10-year yield would challenge bullish equity calls on valuation grounds.

The risk to this narrative is a demand shock that suppresses oil and inflationThe rate at which prices rise across an economy. expectations. If the Iran conflict de-escalates or global growth disappoints, yields could reverse sharply. Additionally, if Warsh signals a more dovish bias than markets currently expect, yield curves could steepen and equities could re-rate higher. Conversely, if yields continue climbing, corporate earnings forecasts and equity risk premiums will face further compression.