U.S. 30-year Treasury yield jumps above 5%

U.S. 30-year Treasury yield jumps above 5%

The yield on the 30-year Treasury bond has reached a significant milestone, crossing the 5% threshold for the first time in over a decade. This development marks a notable shift in the U.S. bond market and has far-reaching implications for investors and the broader economy.

On July 1, 2025, the yield on a U.S. government bond that expires in three decades reached 5.023%, according to data from Wall Street [1]. This is the fourth time this year that the 30-year yield has surpassed the 5% mark, making it the highest level since 2013. The yield on the 30-year Treasury bond had been steadily climbing over the past few trading days, with today's increase marking the fourth consecutive day of gains.

The 30-year Treasury yield serves as a barometer for long-term interest rates and is closely watched by investors and economists alike. Higher yields indicate that the value of existing bonds is decreasing, as the two move in opposite directions. This is generally unfavorable for bondholders but presents an opportunity for buyers of new bonds.

The rise in the 30-year yield comes amidst a backdrop of inflationary concerns and a Federal Reserve (Fed) that has been grappling with how to balance economic growth and inflation control. Despite the Fed's efforts to manage long-term yields, the 30-year yield has continued to rise, reaching a level that is 63 basis points above the effective federal funds rate (EFFR) [2].

The yield curve, which plots Treasury yields across various maturities, has also shown signs of steepening. The 10-year yield has risen by 8 basis points on Friday and by 19 basis points so far in July, while the 30-year yield has climbed to 4.96% [2]. This steepening of the yield curve indicates that investors are increasingly concerned about long-term inflation and the potential for further rate hikes by the Fed.

The increase in the 30-year yield has implications for mortgage rates, which are closely tied to Treasury yields. The average 30-year fixed mortgage rate has been above 6% since September 2022 and has shown little signs of easing, despite the Fed's efforts to manage long-term yields. The spread between the average 30-year fixed mortgage rate and the 10-year Treasury yield has also widened, reaching 2.34 percentage points, which is only the fourth time this has happened over the past four decades [2].

In conclusion, the 30-year Treasury yield crossing the 5% mark is a significant development that reflects the current economic climate and the challenges faced by the Fed in managing long-term interest rates. As the yield curve continues to steepen and mortgage rates remain elevated, investors and homebuyers alike will need to navigate these shifting conditions carefully.

References:
[1] https://www.barrons.com/livecoverage/stock-market-news-today-071525/card/the-30-year-treasury-yield-tops-5--xgUQhLmkMSClXAx94J96
[2] https://wolfstreet.com/2025/07/12/30-year-treasury-yield-jumps-to-4-96-despite-solid-auction-long-end-of-yield-curve-steepens-mortgage-rate-spread-historically-wide/