The yield on the U.S. 30-year Treasury breached the 5% mark for the first time since April 9, reaching an intraday high of 5.011% amid renewed concerns over U.S. fiscal stability. The increase follows Moody’s downgrade of U.S. credit, which cited ballooning deficits and rising interest expenses as key risks to sovereign debt sustainability.
Long-Term Yields Rise as Investors React to Credit Rating Downgrade
Moody’s decision to strip the U.S. of its Aaa credit rating has raised alarm among global investors. The rating agency pointed to elevated federal deficits and the rapid growth of interest payments as core reasons for the downgrade. The last comparable spike in long-term yields occurred during the “tariff tantrum” in early April, when bond market stress triggered sharp corrections across U.S. equities and digital assets.
According to Jim Bianco, head of Bianco Research, “The last time the 30-year Treasury yield closed at or above 5% was on October 31, 2023. The highest closing yield in recent history was 5.11% on October 19, 2023—the most elevated level since July 2007.” The current yield stands just 12 basis points below that milestone.
Foreign Holdings Shift: UK Overtakes China as Second-Largest Treasury Holder
Amid shifting global capital flows, the United Kingdom surpassed China in March 2025 to become the second-largest foreign holder of U.S. Treasuries, with holdings totaling $779.3 billion, trailing only Japan. Both China and Japan have steadily reduced their exposure to U.S. debt over the past 12 months, signaling waning international demand for U.S. sovereign bonds.
This decline in foreign participation underscores the growing need for the U.S. to attract new domestic or institutional buyers to absorb expanding bond issuance—particularly as fiscal deficits widen and Treasury supply increases.
Risk-Off Sentiment Deepens Across Markets
The bond market’s sell-off has rippled into broader risk assets. Nasdaq futures declined by approximately 2%, reflecting growing investor caution. Meanwhile, Bitcoin (BTC), which traded near $75,000 during April’s yield spike, has since recovered to $103,000, after reaching $106,000 over the weekend.
Rising yields, elevated supply expectations, and declining foreign demand together represent a challenging macroeconomic environment for U.S. policymakers. Continued pressure on long-term rates could impact financing conditions, equity valuations, and digital asset flows in the months ahead.
