US 30-Year Yields Return to 2002 High

The U.S. economy's resiliency is facing a critical test as 10-year Treasury yields struggle to sustain levels above 5% amidst a significant bond market repricing. While the sell-off is largely driven by real yields rather than inflation—signaling constructive nominal GDP growth—the market remains skeptical of Treasury and Fed efforts to influence prices. Vishal Khanduja, a fixed-income expert, notes that while the "house" is currently losing to market fundamentals, the resulting surge in real income makes fixed income mathematically attractive for asset allocators. Investors are increasingly shifting capital from cash and equity gains into the zero-to-seven-year portion of the curve to capture these yields. However, a definitive catalyst for a duration rally is still missing, leaving the market focused on upcoming Treasury refunding announcements and auction results to price long-term risk.