US Treasury Yields Spike as Second Inflation Wave Hits

The US government sold $691 billion in Treasury securities this week, including $155 billion in notes and bonds and $536 billion in T-bills. The 30-year bond yield rose to 5.12%, the highest since June 2007, after an auction at 5.046%. The 10-year yield hit 4.60%, the highest since January 2025. CPI inflation surged 3.8% year-over-year, driven by core services, gasoline, electricity, and food, while PPI soared 6.0% year-over-year. The bond market is nervous about the Fed being 'behind the curve' and potentially allowing inflation to persist. The 3-year yield spiked 76 basis points since February 27, now at 4.15%, signaling expectations of rate hikes. The yield curve has shifted from a sag to a hump in the middle maturities. The 40-year bond bull market ended in mid-2020.