If you think “way” back to this time last year, you might vaguely recall something about a term premium scare.

Beginning in late July of 2023, the Treasury term premium began to rise out of negative territory (where it shouldn’t be in the first place, according to theory anyway). By October of 2023, it was positive to the tune of nearly 50bps.

The sharp increase over just a few months was a big story. The move reflected a combination of factors which together comprised an ostensibly compelling bear case for the US long-end: Over-supply concerns collided with political gridlock to trigger a ratings downgrade over the summer, and there were palpable concerns around what a shifting buyer base — i.e., Treasury’s growing reliance on price-sensitive investors as the price-agnostic bid dissipated — might mean for yields.

Janet Yellen famously quashed the rebellion when, at the quarterly refunding on November 1, 2023, Treasury tipped smaller-than-expected coupon increases, alleviating supply concerns and setting the stage for what would become a pretty epic “everything rally” into year-end. Fast forward 12 months and the term premium’s back as a story that matters.

As the figure shows, it’s +21bps now. That’s up 45bps or so in a month, which is to say it matches (almost exactly) the increase in 10-year nominal yields over the same period.

This isn’t what you want. I mean, look, there’s something unnatural about a negative term premium, so I suppose you could argue it’s “healthy” on principle. All the same, this is the second rapid ascent in a year, and that’s indicative of real concerns regarding “the proposition that the US government is making,” as Paul Tudor Jones put Tuesday, while commiserating with Andrew Ross Sorkin about debt and deficits.

Bottom line: The market’s once again demanding “extra” (i.e., some) compensation to account for the same constellation of medium- to long-term risks which triggered last year’s term premium scare. And yes, some of this year’s scare is directly related to the perception that Donald Trump, the self-described “king of debt,” may return to the White House.