Long-term Treasury yields have surged past 5 percent, a level last breached in 2007 just before the financial crisis. At the May 13 auction, buyers demanded 5.046 percent on fresh 30-year bonds, while open-market yields hovered near 5.2 percent. Rising rates translate to pricier mortgages and business loans, putting upward pressure on consumer costs and corporate expenses. The driver is intensifying concern over inflation fueled by Middle East tensions, Trump-era tariffs, and oil price volatility.

Global bond markets are joining the selloff. UK gilts trade near 30-year highs amid Labour Party instability, German 30-year bunds sit around 3.7 percent — their peak since 2011 — while Japanese yields have touched their highest since 1998. Across these economies, growth is stalling while inflation climbs, creating stagflation risks that bond traders are pricing in through higher yields.

In the U.S., rising debt and repeated credit downgrades have eroded Treasuries' traditional safety premium, with Harvard research suggesting yields are inflated by up to a quarter-point. The Fed faces pressure to keep rates elevated despite political pressure for cuts, and incoming chair Kevin Warsh has signaled support for lower rates. For long-term investors willing to hold through the volatility, current yields may already be reasonably priced.