Moody’s Gives Fresh Impetus to Bond Vigilantes and Stock Bears
The 30-year yield is jumping above 5%.
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The Moody’s downgrade of the US is a powerful symbol of the ongoing deterioration of the nation’s finances, and the market reaction is a reminder that the bond vigilantes have the US in their crosshairs.
Bond investors are selling longer-dated bonds, pushing the yield on the 30-year above 5% to the highest since November 2023. The impact spilled over to other asset classes too, sending US equity-index futures lower and a gauge of the dollar sliding 0.5%, a reminder of the “Sell America” trade that exploded last month.