“Rates are too high, Scott,” Donald Trump said, while hosting a high-level delegation from Riyadh back in November. “If you don’t get it fixed fast, I’m going to fire your ass. Okay?”

He was joking. The same way Trump’s always joking, which is to say only half, and until he isn’t.

Trump was actually referring to Scott Bessent’s “failure” to pressure the Fed into cutting rates, but the broader context was the administration’s early, often and avowed pledge to bring down borrowing costs for American citizens, a promise Bessent explicitly tied to the longer-end of the Treasury curve.

“The president wants lower rates,” Bessent told Larry Kudlow, during a Fox Business interview just a few weeks after Trump’s second inaugural. “He and I are focused on the 10-year Treasury yield.”

The idea was to dispense with the notion that Trump intended to pressure the Fed, which doesn’t directly control the yield on benchmark US debt, the security off which nearly everything in the world’s priced. In fairly short order, Trump abandoned any pretense to respecting Fed independence, and between his early tariff push and sundry geopolitical broadsides, he didn’t do himself (or Bessent) any favors in terms of keeping a lid on yields.

Ironically, a delicate situation in longer tenor Treasurys last spring was largely under control by the time Trump jokingly threatened to fire Bessent in November. Fast forward to May and it’s back to the future, where that means 13 months on from “Liberation Day,” US yields are back at levels which threaten to undermine a nascent housing recovery and — gasp — the equity market, a sacred cow if ever there was one.

The long bond remained in the spotlight on Tuesday, when yields breached the 5.176% peak from 2023 on their way to the highest since 2007.

There’s the chart. Although the proximate cause is the war and the deteriorating inflation outlook, it’s important to step back and remind ourselves that the long bond has exactly nothing going for it fundamentally.

Domestic politics in the US are a mess on tidy days and there are palpable concerns about Kevin Warsh’s commitment to price stability in the face of political pressure.

As for America’s fiscal trajectory… well, it isn’t great, to put it politely. That’d be “fine” (deficits and debt really don’t matter for the US as long as dollar hegemony’s preserved) but for the administration’s determination — it’s almost a compulsion — to alienate allies and agitate adversaries.

Even if you doubt, as I do, the notion that agitation with Trump’s enough on its own to trigger sales of US Treasurys (i.e., spite selling), the mere act of creating geopolitical turmoil can force other nations (finance ministries, central banks, FX reserve managers etc.) to sell if only to defend their currencies.

For whatever it’s worth, the long-end ETF’s now in oversold territory (14-day RSI <30), but as the figure above reminds you, this hasn’t been a knife worth catching.

To be sure, this isn’t a US-only phenomenon. Indeed, Treasurys are getting a lot of spillover from the UK (gilts) and Japan (JGBs). Those countries’ fiscal woes are arguably worse than America’s (if not on all metrics, certainly on some), but Trump made things worse by starting a war which threatened to worsen the trade balance of energy importers.

“The question [is] where should one anticipate technical support or dip-buying interest to become relevant?” BMO’s US rates team wondered, of the long bond on Tuesday. Although they drew a parallel between the current episode and selloffs in 2024 and 2025 in the course of suggesting the “bond bearish impulse during the first half of the year [could] eventually [be] offset by either [inflation] fears failing to materialize, or a slower growth outlook,” they were quick to concede that their “conviction in this narrative has grown shakier as 30-year rates reached levels not seen since October 2023.” And now since 2007.

Another concerning aspect of this slow-burning bond meltdown is that shorter-maturities, responding as they are to the hawkish read-through for policy from the energy shock, are just as beset as the long-end. That attenuates the relief Bessent can get by concentrating issuance at the front-end.

“The resumption of investor focus on reaccelerating inflation has repriced the global central bank policy path hawkishly while the FOMC outlook is at the very least less dovish with real delta of the dreaded ‘Fed hikes’ potential by year-end,” Nomura’s Charlie McElligott said, adding that inflation concerns and the potential for a hawkish escalation from policymakers “have coincided with a fresh leg down” in gross exposure for risk parity strategies, which sold an estimated $8.4 billion in global bond futures over the past two weeks on the bank’s estimates.

For the record, 10-year US yields are now 15bps higher than they were when Bessent mused, during his February 2025 interview with Kudlow, that “if we deregulate the economy, get [the] tax bill done [and] get energy down, rates will take care of themselves.”