U.S. Treasury bonds remain the cornerstone of global finance, with 10-year yields serving as the benchmark for pricing assets worldwide. When yields surged in May, the ripple effects were immediate – stocks, bonds, and the dollar all declined simultaneously, demonstrating Treasuries’ unparalleled influence across markets.
The rapid yield increase created significant pressure on risk assets by raising borrowing costs and discount rates. This volatility revealed how sensitive global markets remain to shifts in U.S. interest rates, particularly when technical factors like convexity hedging amplify the moves.
While the Fed’s policy outlook remains the primary driver, the May selloff highlighted how Treasury movements can destabilize leveraged positions globally. As the ultimate safe haven, U.S. debt continues to dictate financial conditions far beyond American borders, reinforcing its role as the anchor of the world’s financial system.
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