The bond market is screaming and nobody in Washington is listening.
The US 20-Year Treasury yield just crossed 5% for the first time in months.
This is a warning signal that the entire cost of borrowing in America is repricing higher.
Here is what that actually means for you.
ise, mortgage rates follow.
The 30-year fixed mortgage just hit 6.53% and it is still climbing.
Two months ago, Wall Street was pricing in multiple Fed rate cuts this year.
Every single one of those bets has now been wiped out.
The trigger was not inflation data but rather the war.
The US and Israel began striking Iran in early March and oil prices spiked.
Energy feeds into everything food, transport, manufacturing, rent.
Bond traders panicked and the so called “safe haven” trade flipped.
Instead of buying bonds as a refuge, investors sold them because war now means inflation, not safety.
Hedge funds had massive leveraged bets positioned for rate cuts and when yields started moving the wrong way, they were forced to sell their own treasury positions to cover losses.
Which pushed yields higher, which forced more selling pushing yields higher again.
That is how a spike becomes a spiral and the 10-year yield hit 4.39%, the highest since last summer.
The 30-year yield is knocking on 5%, the 20-year just blew through it.
Fed Chair Powell said last week that officials need to see real progress on inflation before they consider any rate cuts.
Translation: do not expect relief.
Mortgage refinance applications just dropped 19% in a single month, spring homebuying season, the most critical window of the real estate year is collapsing in real time.
And there is one more layer most people are not talking about.
The US government has to borrow hundreds of billions of dollars to finance a war.
That means flooding the bond market with new supply.
More bonds means lower prices, lower prices means higher yields.
The market is not broken, market is working exactly as designed.
It is telling you the United States is taking on enormous financial risk and demanding a higher price to fund it.