What is the Bond Market Telling Us?

Why are long-term Treasury yields rising even as the U.S. economy slows?

In this new paper by Ernie Tedeschi, he examines how the April 2 tariff announcement marked a structural break in global investor behavior. The recent surge in long-term Treasury yields isn’t just about inflation or growth and is instead a structural warning.

Key findings:

• Yields up despite weaker growth
• Foreign investors showing signs of a “buyer’s strike”
• America’s “exorbitant privilege” may be eroding

The analysis finds that nearly 70% of the yield spike since last fall is driven by a rise in the term premium, not inflation expectations or rate hikes. As a result, there are growing concerns about U.S. fiscal sustainability, global credibility, and the durability of the dollar’s reserve status.