--- title: "Will US Treasuries Trigger the Next Storm in US Stocks? The Coming Week Is Crucial" type: "News" locale: "en" url: "https://longbridge.com/en/news/294798826.md" description: "The global pricing anchor is sounding alarms! Doubts over the Federal Reserve's credibility have sent long-term bond yields soaring, with demand for put options hitting its highest level since the 2008 financial crisis. Turmoil in the bond market is rapidly spreading to equities. With this week's debt issuance plans and the crucial non-farm payrolls data on the horizon, a cross-market storm may be imminent" datetime: "2026-08-04T08:01:03.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/294798826.md) - [en](https://longbridge.com/en/news/294798826.md) - [zh-HK](https://longbridge.com/zh-HK/news/294798826.md) --- # Will US Treasuries Trigger the Next Storm in US Stocks? The Coming Week Is Crucial The US Treasury market is sending increasingly strong signals of stress to other asset classes, with the stock market bearing the brunt. Long-term US Treasury yields surged last week, **with the 30-year Treasury yield touching its highest level since 2007, and the 10-Year Treasury Yield breaking out of the trading range it had maintained since late 2023.** Meanwhile, the ICE BofA MOVE Index, which measures expected volatility in the US Treasury market, rose to its highest point since May. Demand for put options betting on falling bond prices skyrocketed. Data from the Chicago Board Options Exchange (CBOE) shows that **the one-month put skew for an ETF linked to iShares 20+ Year US Treasury Bond ETF soared to its highest level since the 2008 financial crisis.** **In the coming week, the release of details on the US Treasury Department's financing plan and the July non-farm payrolls report could further intensify turbulence in the bond market.** Bob Elliott of Unlimited Funds recently wrote in a commentary, "It is difficult to judge how much longer other asset markets, such as stocks, can remain supported at current interest rate levels without being dragged down." Gennadiy Goldberg, Head of US Rates Strategy at TD Securities, also warned that uncertainty surrounding the Federal Reserve's policy guidance, combined with geopolitical noise and other factors, has created a precarious market environment. ## Fed Credibility Questioned as Long-Term Yields Break Out The core driver behind this rise in US Treasury yields stems from market doubts about the Federal Reserve's policy credibility. Since Federal Reserve Chair Kevin Warsh took the helm, he has adopted a hardline stance on fighting inflation. However, with the inflation rate remaining above the Fed's 2% policy target for five consecutive years, investors are beginning to doubt whether the Fed truly has the willingness to raise interest rates again. Last Wednesday, the Fed's interest rate decision committee saw a rare divergence—three regional Fed bank presidents voted to raise rates, contrary to the stance of the majority of committee members. When Warsh concluded last week's press conference, long-term bond yields suddenly jumped, while short-term yields declined simultaneously, causing the spread between the two to narrow sharply. Analysis by Dow Jones Market Data indicates that this was the largest compression of the yield curve on a "Fed decision day" since 2023. Goldberg from TD Securities stated: **"The market is questioning just how determined the Federal Reserve is in controlling inflation."** He also pointed out that while the base case scenario does not include rate hikes in the next two years, the probability of a hike has "significantly increased." ## Bond Market Volatility Rises, Hedging Demand Surges The unusual movements in yields quickly transmitted to the derivatives market, significantly heating up hedging demand. **The ICE BofA MOVE Index touched its highest level since May, indicating that traders are actively hedging against the risk of further interest rate increases.** At the same time, the ratio of put option volume to call option volume for the iShares 20+ Year US Treasury Bond ETF (TLT) rose markedly. CBOE analysts noted that the one-month TLT put skew has soared to its highest level since the 2008 financial crisis. Of particular note is that this round of rising long-end yields diverged from crude oil prices—oil prices fell rather than rising in tandem with yields. This has further weakened the correlation between yields and oil prices, exacerbating market uncertainty. ## Spillover Effects Emerge, Rising Pressure on Stocks Turmoil in the US Treasury market has historically been a precursor to equity market risks, and the current situation is equally unsettling for equity investors. Bob Elliott pointed out in his commentary that whenever US Treasury yields touch or approach current levels, pressure often begins to spread to other markets, with stocks being the first to suffer. The current 30-year Treasury yield has reached 5.239%, and the 10-year yield stands at 4.693%, both within historical highs. Goldberg also acknowledged that geopolitical uncertainty stemming from the situation in Iran, ambiguous Federal Reserve policy guidance, and a confluence of other market noises have collectively created the current fragile market environment. "Various uncertainties are intertwined," he said. ## Multiple Event Windows Approach, A Critical Week Ahead The coming week will be a key window period to determine whether the pressure in the US Treasury market will spread. Later this week, **the US Treasury Department will announce details of its latest government financing plan, and any surprises relative to expectations could trigger a new round of bond market volatility. Several important economic data releases are also scheduled for this week, culminating in the July non-farm payrolls report on Friday. The employment data will have a significant impact on market expectations regarding the direction of Federal Reserve policy.** Meanwhile, last week, the US Treasury Department and the Federal Reserve, in coordination with Japanese authorities, conducted a historic coordinated intervention to stabilize the continuously falling yen. Analysts believe that **the US side's participation in the intervention was partly motivated by the desire to prevent another outbreak of volatility in the US Treasury market.** The $30 trillion US Treasury market is the cornerstone of the global financial system, serving as both the core collateral for short-term institutional liquidity and the benchmark pricing anchor for trillions of dollars in global debt. **Once this "sleeping giant" continues to stir, its vibrations will extend far beyond the bond market itself.** ### Related Stocks - [CBOE.US](https://longbridge.com/en/quote/CBOE.US.md) - [TLT.US](https://longbridge.com/en/quote/TLT.US.md) - [TD.US](https://longbridge.com/en/quote/TD.US.md) ## Related News & Research - [Short-term offers yield 4%+, expert says](https://longbridge.com/en/news/294566678.md) - [Government Bonds Now Have An Inconvenience Yield](https://longbridge.com/en/news/294543296.md) - [US Treasury yields soar as market struggles to interpret Fed](https://longbridge.com/en/news/294339648.md) - [This 6.7%-yielding pipeline stock just raised its payout again -- here's why there's no stopping it now](https://longbridge.com/en/news/294587454.md) - [10-Year Treasury Yield Falls to 4.625% — Data Talk](https://longbridge.com/en/news/294863503.md)