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.