Oguz Erkan
Investor, Founder of Capitalist Letters
Long-dated Treasury yields keep rising because of US debt: Hormuz traffic has recovered and PCE inflation is cooling, yet yields won't come down. The government refinances $9 trillion a year plus over $2 trillion of new borrowing, about $30 trillion of issuance through 2030. With faster growth and deficit cuts seen as unlikely, investors see inflating the debt away as inevitable and refuse lower yields, pushing up the term premium itself, the textbook definition of a debt spiral. x.comÂ
US Treasuries are no safe haven because governments everywhere face rising debt costs and are expected to devalue their currencies, leaving hard assets as the only safe haven; China is planning to replace all its Treasury holdings with gold. Per @KobeissiLetter, OECD gross interest costs hit a record $2.24 trillion in 2025, with the US at $1.45 trillion, and OECD countries are expected to borrow a record $18 trillion in 2026. x.comÂ
Inflation has broken long-dated US Treasuries' safe-haven role. Long-term Treasuries have returned -4.1% annually in the 2020s to date, versus +4.9% in the 1930s. Long bonds look unlikely to do well for at least the rest of this decade. x.com x.com x.com x.comÂ
Long-dated US Treasuries face pressure because the market will buy US debt only at 5%-plus yields, with no short-term fix in sight. The 10-year yield keeps climbing parabolically as Washington issues enormous debt to fund deficits, investors demand more compensation for inflation and duration risk, the Fed is now raising rates, and Treasuries must compete harder for global capital. The government seems reluctant to act, while rising oil prices add to inflation pressure. x.comÂ
Long-dated US Treasuries benefit from falling long-end yields as the Fed's inflation response becomes a policy error. The Fed looks likely to hike again to defend its credibility despite a supply shock; 5% rates are unsustainable, and current price action points to financial damage followed by a hard pivot. A one-year rate freeze could instead let long yields rise by giving the economy a breather and making later hikes more likely. x.com x.com x.com x.comÂ
Long-dated Treasuries carry duration risk that isn't worth taking given a structural 6% U.S. deficit and bipartisan acceptance of inflation to support asset prices. With 4.5% available at the short end, there is little reason to own the long end. Even Lacy Hunt, long confident in deflation, is throwing in the towel on long bonds over fiscal largesse. Six years after Covid nothing has changed, so this is not about a local tradable bottom. x.com x.comÂ
Long-dated Treasury yields are rising on inflation and fiscal budgets. The 30-year yield is at its highest since before the 2007 financial crisis, and within weeks the headlines could read highest since 2004. x.comÂ
Long-dated Treasuries could rally 20-30% over the next few years if deflation outpaces growth for a period. That would pull investors into bonds to lock in higher yields, pushing yields down, since government money printing isn't keeping up with emerging deflation. US government finances should also strengthen as growth outpaces debt, making bonds more attractive. It is a small bet that should work for a period of time. x.com x.com x.comÂ
Investors are demanding much higher yields to hold long-term Treasuries because of persistent inflation, ballooning government debt and uncertainty around the Fed. That has pushed long-term Treasury prices to 22-year lows, and US debt has just crossed $40 trillion for the first time. x.comÂ
Treasuries are losing their risk-free appeal as inflation runs hot and US government credibility erodes. If the 10-year projects inflation to surge, bonds that barely beat it make little sense, and Fed hikes won't slow a hot economy or fix an energy supply shock with oil at $100. Higher borrowing costs make the growing debt harder to finance, leading to money printing and more inflation. Big tech is more creditworthy than ever; even for fixed income, Alphabet's corporate debt is preferable. … Show more
Long-dated Treasuries are the safe-haven trade again as money rotates into yield. With the 30-year paying over 5%, holding non-yielding assets is harder to justify; after the Fed held, yields fell across the curve and TLT rose 1%. x.comÂ
Long-term Treasury yields keep climbing because investors increasingly doubt America enough to lend to it for 30 years, and nobody can force them to lend cheap. US debt is $40 trillion, interest costs over $1 trillion a year, more than the military, and the deficit is 6% of GDP during a boom. Treasury Secretary Scott Bessent's $4 billion buybacks are fake demand that fixes none of the overspending, a point Stanley Druckenmiller made in his op-ed "Let the Bond Market Speak." x.com x.com x.com … Show more
