US bond market faces pressure as Treasury yields approach 19-year high

The US bond market is facing intense pressure as the 30-year Treasury yield approaches a 19-year high of 5.3 per cent. Treasury Secretary Scott Bessent attempted to stabilize yields through accelerated bond-buying operations, but the intervention provided only temporary relief before yields climbed again.

President Donald Trump commented on the turmoil, suggesting that US military power serves as the “ultimate intervention” for the market, though analysts noted the remark lacks a clear policy mechanism. While geopolitical tensions in the Middle East and disruptions in the Strait of Hormuz have impacted crude oil prices, experts point to rising “crack spreads”—the cost of refining crude into products like diesel—as a primary inflationary driver. These spreads have reached levels significantly higher than typical averages due to refining shortages caused by strikes on Russian plants and Middle Eastern instability.

Financial strategists warn of significant risks if the 30-year yield breaks the 5 per cent threshold. Analysts from Bank of America suggest such a breach could trigger a US credit event and jeopardize AI-related economic growth, while others warn that rising diesel prices are beginning to impact broader food and producer costs.