U.S. bond yields remain under pressure despite the Treasury’s commitment to expand its debt buyback program to more than double its original size. The 30-year Treasury yield climbed above 5.23% and the 2-year yield reached 4.20%, amid concerns over surging U.S. government debt, increased corporate debt issuance for artificial intelligence investment and higher inflation from geopolitical tensions. CFRA strategists note that it is the speed of the moves in yields, not the absolute level, that poses the main risk to equities. Rising capital costs are squeezing corporate profit margins and free cash flow, as demonstrated by Alphabet’s negative free cash flow last quarter. Meanwhile, commodities such as gold and copper, as well as Bitcoin which surged 11% in just two days, are benefiting as safe-haven assets.
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