The US 30-year Treasury yield climbed to 5.197% intraday, its highest level since July 2007, leaving it less than 6 basis points below the 5.25% level that BMO Capital Markets has flagged as a warning zone for stock valuations. The move came with a gain of more than 3 basis points on the day and added pressure to a market that started the year expecting the Federal Reserve to cut rates.
Rate-cut expectations are losing traction
Jim Lacamp, senior vice president at Morgan Stanley Wealth Management, said on CNBC that falling rates had been one of the core assumptions behind the bullish case early in the year. That assumption is now being challenged. The report linked the shift to higher oil prices tied to the Israel-Iran conflict, which fed inflation expectations and triggered selling in fixed-income markets, pushing yields higher.
The move is spreading across the curve
The rise was not limited to the long end. The 10-year Treasury yield reached 4.687%, its highest level since January 2025, while the 2-year yield rose to 4.12%. The 2-year note is widely watched as a signal of how investors are pricing the Fed’s path over the next one to two years. In the article’s reading, that move shows the market is now putting money behind the view that no rate cut will arrive this year, with some tightening risk also being priced in.
Why 5.25% matters for stocks
BMO Capital Markets analyst Ian Lyngen pointed to 5.25% as the level to watch. If the 30-year yield breaks above it, the result may not be a brief pullback in equities but a longer repricing in valuation multiples. With the yield already at 5.197%, that cushion has become very small.
Fund managers see a path toward 6%
According to Bank of America’s latest global fund manager survey, 62% of respondents expect the US 30-year Treasury yield to rise to 6%, while only 20% think it can hold at 4%. A move to 6% would mark the highest level since late 1999. The report framed that view as more than a simple inflation bet, saying it reflects doubts about the central bank’s ability to contain price pressure.
Global long-end yields are rising too
The repricing is not confined to the US. The article cited 3.684% for Germany’s 30-year government bond yield and 5.773% for the UK 30-year yield, while Japan’s 30-year government bond yield hit a fresh record high this week. With long-term yields rising across major developed markets at the same time, global funding costs are being repriced, changing the backdrop for bonds, equities, and other risk assets.