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Yields on 30-year US bonds broke 5% last week, a level not seen since before the Great Financial Crisis. The Treasury Department bought bonds in an attempt to lower yields. It worked — for a day, then bond yields went back up. Meanwhile, in a not-exactly-unrelated development, the US national debt just passed $40 trillion.
Bond doomers (I am one) have been waiting for this moment for about 15 years. But we are not yet vindicated. Yields may fall again, though it’s unlikely the low-rate environment of the 2010s is coming back. We may be in for a rocky time, when long-duration debt earns its term premium. Here are three things I’ve learned about the bond market that are helping me navigate this uncertainty.
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Allison Schrager is a senior fellow at the Manhattan Institute, a contributing editor of City Journal.