Reassessment of U.S. debt risk: To be continued

U.S. Treasury yields have risen sharply. The current market focus is concentrated on oil prices, inflation, and monetary policy. However, after breaking down the interest-rate structure, it can be seen that the resilience of the U.S. economy’s fundamentals contributes more to yields, and there may be new disruptions in the future.

What are U.S. Treasury yields pricing? The contribution of economic fundamentals is greater than inflation, and the stickiness behind rising interest rates may be stronger

After the U.S.-Iran conflict, global long-term bond yields moved higher in sync. UK bond yields were the most prominent upward, followed by Japanese and French bond yields, while U.S. Treasuries were in a mid-to-strong position. As of May 20, the UK 10-year government bond yield rose from 4.29% on February 27 to 4.96%, up 66bp. The Japanese 10-year government bond yield rose from 2.13% to 2.77%, up 64bp. The U.S. 10-year Treasury yield rose from 3.97% to 4.57%, up 60bp. Long-term bond yields in eurozone countries such as Germany and France, as well as Italy, also rose at the same time.

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