Yields roar toward 5% with deficit fears rising and Fed powerless to stop it

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The breakout from the bull flag pattern confirms continued duration stress in the long end, which aligns with a growing theme: the bond market is starting to price in not just inflation stickiness, but also the re-emergence of fiscal risk and deteriorating foreign demand. We’re now seeing yields push toward the 5% zone again despite softening commodity prints like natural gas and disinflationary impulses in near term CPI, a sign that the market no longer believes the Fed has control of the long end, or that “higher for longer” is enough to contain structural deficits.

The RSI trend break also confirms renewed momentum to the upside, signaling this is not a false breakout. From a policy perspective, this kind of move limits the Fed’s ability to cut rates aggressively without triggering a convexity shock further out the curve. In other words: Powell is boxed in. The Treasury’s issuance strategy under Bessent, heavy front end, minimal long duration was designed to dampen this risk, but it may not be working. Global capital, especially foreign central banks are clearly demanding a higher term premium to finance America’s long run obligations, and that’s being expressed right here in the 30Y breakout.

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