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U.S. 30-Year Treasury Yield Breaches 5% Amid Moody's Rating Downgrade, Fiscal Concerns
Rising deficits, reduced foreign demand, and investor unease over trade policy drive bond market turbulence and broader risk aversion.
Updated May 19, 2025, 2:01 p.m. Published May 19, 2025, 7:53 a.m.
What to know:
- The yield on the U.S. 30-year Treasury crossed 5% for the first time since April 9.
- The United Kingdom has overtaken China as the second-largest foreign holder of U.S. Treasuries, as both China and Japan have steadily reduced their holdings over the past year.
The yield on the U.S. 30-year treasury bills crossed the 5% threshold for the first time since April, reaching an intraday high of 5.011%. This move comes in the wake of Moody’s downgrading U.S. credit, stripping the country of Aaa rating due to mounting deficits and escalating interest expenses.
The last time the long end of the yield curve reached 5% was on April 9, during the so-called "tariff tantrum," which triggered sharp sell-offs in both crypto and U.S. equity markets.
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At that time, bitcoin was hovering near its local low of around $75,000. It has since rebounded strongly, currently trading around $103,000 after hitting a Sunday high of $106,000.
“The last time the 30-year closed at or above 5% (at the 6 PM ET mark) was October 31, 2023. The highest closing yield in recent memory was 5.11% on October 19, 2023, the highest since July 2007, nearly 18 years ago. The current yield is just 12 basis points away from surpassing that milestone,” said Jim Bianco, head of Bianco Research.
In addition, the United Kingdom surpassed China in March to become the second-largest foreign holder of U.S. Treasuries, with holdings totaling $779.3 billion—trailing only Japan, which remains the top foreign holder.
Both China and Japan have continued to reduce their U.S. Treasury holdings over the past 12 months, underscoring the growing need for the U.S. to attract new buyers for its debt.
As the U.S. Treasury faces growing deficits, with the potential of more bonds being issued, increasing supply and thereby pushing yields higher while prices fall. Meanwhile, Nasdaq futures are down around 2%, reflecting broader risk-off sentiment in the market.
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