“Long-term bond yields continue to move up”
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Market Mood
Global equities have remained resilient despite higher oil prices and inflation pressures from the Iran conflict, but long-term bond yields have risen sharply. The 30-year US Treasury yield has crossed above 5%, coinciding with Kevin Warsh’s confirmation as the new Federal Reserve Chairman.
Similar moves are seen globally, with UK gilts above 5.6% and Japanese 30-year bonds nearing 4%. Rising yields reflect inflation concerns and large fiscal deficits, posing risks to equities as the “risk-free” rate climbs. While higher rates hurt bond prices in the short term, they create future opportunities for multi-asset portfolios once rate cuts resume.
Inflation remains elevated at 3.8% in April 2026, still above the Fed’s 2% target, limiting scope for easing. Hawthorne maintains a preference for shorter-dated treasuries and inflation-protected securities, viewing them as more attractive than longer-duration bonds.