30-Year Treasury Yield Nears 5% Again as Bulls Retreat and Global Bond Markets Falter

TradingKey - U.S. long bonds extended their selloff for a fifth straight session, with the 30-year Treasury yield climbing toward the closely watched 5% threshold—its highest level since mid-June. A combination of fading demand for long-duration debt globally, renewed uncertainty from Donald Trump's proposed tariffs, and last week's unexpectedly strong U.S. jobs report has driven the downturn.

On July 3, nonfarm payrolls data revealed continued labor market resilience, prompting traders to sharply scale back expectations for a July rate cut. According to the CME FedWatch tool, odds of a rate reduction this month fell to just 4.7%, down from 23.8% the previous day.

Anticipating weaker labor data that could bolster the case for easing, many traders had built up substantial long positions in Treasuries ahead of the release. But the robust employment figures triggered a swift unwinding of those bullish bets. Open interest in Treasury futures—used to gauge positioning risk—has dropped rapidly in recent sessions.

In 10-year Treasury futures alone, about $5 million in risk per basis point has been unwound, implying roughly $7 billion worth of 10-year paper was dumped. With falling expectations for rate cuts, bond yields have surged—pressuring prices lower in the process. 

David Bieber, a strategist at Citigroup, said that the stronger-than-expected jobs data had virtually eliminated expectations for a July rate cut, putting clear pressure on Treasury bulls. He noted that the broad unwinding of positions was pushing bond prices lower.

Global Bond Market Faces Renewed Pressure

Mounting signs of stress are emerging across global sovereign debt markets. Following last week’s selloff in UK gilts driven by fiscal concerns, Japan’s 30-year government bond yield is now flirting with record highs.

Andrew Brenner, head of international fixed income at NatAlliance Securities, said that long-dated government bonds around the world were coming under pressure as supply increases and many traditional buyers withdraw from the market.

All eyes now turn to this week’s hefty Treasury issuance. The U.S. Treasury is scheduled to auction a total of $119 billion in bonds, including $58 billion of 3-year notes on Tuesday. Demand was tepid, with the notes pricing at a high yield of 3.891%, just below where they traded in the secondary market, and a bid-to-cover ratio of 2.51—below the recent average.

The spotlight now shifts to Wednesday and Thursday, when $39 billion of 10-year notes and $22 billion of 30-year bonds will hit the market. Those sales will offer key insight into investor sentiment surrounding U.S. fiscal health and the broader economic outlook.