The U.S. bond market is experiencing its most severe dislocation in roughly two decades, with the 10-year Treasury yield ($TNX) surging to a new post-2007 high of 5.18% and the 30-year yield ($TYX) reaching 5.47% — its steepest since 2004.
The selloff in bonds was ignited by a confluence of forces: surprisingly robust economic data showing U.S. business activity at a five-year high; hawkish Federal Reserve rhetoric signaling further rate hikes; elevated crude oil prices driven by the ongoing Iran conflict; and a disastrous 5-year Treasury auction that tailed real-time markets by 3.1 basis points — the second worst in recorded history.
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