David Rosenberg on whether he would bet against long-term Treasuries

Treasury Secretary Scott Bessent and Rosenberg Research President David Rosenberg analyze the trajectory of U.S. fiscal policy and the drivers behind rising bond yields. While the national debt has reached $40 trillion, the administration signals that the deficit likely peaked in 2025 due to fiscal consolidation and the resumption of tariff revenues. Contrary to common narratives blaming government spending for rising yields, the recent surge in the 10-year Treasury note is attributed to massive long-dated debt issuance by AI "hyperscalers" competing for capital as their free cash flow turns negative. Additionally, uncertainty surrounding the Federal Reserve's strategy to reach its 2% inflation target has increased the risk premium on duration. Despite these pressures, the Treasury's bond buyback operations suggest a "line in the sand" to prevent the 10-year yield from exceeding 5%, potentially utilizing more aggressive interventions if market volatility persists.