The US Treasury market, long considered the safest parking lot for capital on the planet, is starting to feel more like a demolition derby. The 30-year Treasury yield surged to 5.34% in mid-August, its highest level since 2007, while the benchmark 10-year yield has been testing 4.80%, a mark not seen since January 2025.
Traders aren’t just watching the carnage. They’re actively positioning for more of it, executing large options trades designed to cushion portfolios against even steeper losses in government debt.
What’s driving yields higher
US national debt has crossed the $40 trillion threshold, with the federal budget deficit running near 6% of GDP. Over the last two years alone, total US debt has expanded by roughly $5 trillion. That’s a lot of new paper the government needs someone to buy, and buyers are starting to demand better compensation for the risk.
Geopolitical tensions, including the conflict with Iran, have pushed oil prices higher and kept price pressures stubbornly elevated.
