What’s the plan?

The Treasury curve is sending a message worth sitting with.

As of today, the 10-year note is trading around 5.04% (its highest level since 2007) and the 30-year bond is above 5.38%. The 2-year sits near 4.69%. That's the entire long end of the curve, from 10 years out to 30, camped above the psychologically important 5% threshold.

A few things stand out:

1- This isn't a one-day spike. Yields have climbed steadily over the past month, with the 10-year up roughly 30 basis points in four weeks alone.

2- The move is happening into a Fed decision, not after one. Markets are pricing a high probability of a rate hike this week, a reminder that "higher for longer" can still mean "higher," not just "steady."

3- Oil and inflation expectations are doing a lot of the work here. The correlation between crude prices and the 10-year yield has tightened noticeably, which tells you the bond market is treating energy costs as a genuine inflation signal again, not noise.

4- Heavy corporate debt issuance, much of it tied to AI infrastructure buildout, is adding real supply pressure at the long end, competing with Treasuries for the same pool of capital.

For portfolios, this matters beyond the headline number. A 10-30yr curve above 5% resets the math on everything from mortgage rates to discounted cash flow valuations to the relative appeal of fixed income versus equities. Duration risk is being repriced in real time.

What is interesting is that Secretary Bessent, aka “the House”, is not doing anything yet. For an experienced Macro hedge fund manager it would look like he’s setting up a tramp by daring investors to sell bonds only to crush them at due time. If hedge fund managers are selling long term bonds, those bonds are getting cheaper, which allows Mr Bessent to buy more bonds with less money, but it creates a spiral of pouring money into a growing debt and growing deficit environment. Is that the plan?

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