The Bond Market Story Isn’t Over, and Here’s Why Nasdaq Barely Reacts
Team
This is a longer one, but it’s worth the read. What’s happening in the bond market right now is one of the most important macro stories of the year, and understanding why some markets scream about it while others barely whisper is exactly the kind of intermarket thinking we’ve built this whole system around.
Where things actually stand right now
Yesterday’s Treasury buyback announcement gave the market a brief moment of relief. Yields dropped, the dollar tumbled, gold rallied. But that relief didn’t last long. Today, the 30 year Treasury yield pushed to a fresh 5.33%, a new 19 year high, right back above where it was before the buyback news even landed. The 10 year yield climbed toward 4.75%, its highest level in 20 months, before easing slightly back down to around 4.70% later in the session.
So the buyback bought Treasury a day of calm. It didn’t fix the underlying problem.
Why yields keep climbing despite Treasury actively trying to hold them down
There are three real forces at work here, and they’re all pulling in the same direction.
First, the US fiscal picture is deteriorating. July’s budget deficit was the highest monthly total since March 2021. That means the government needs to borrow more, which means issuing more debt, and more supply of bonds hitting the market naturally pushes prices down and yields up.
Second, inflation remains stubborn, still sitting above the Fed’s 2% target, and rising oil prices tied to the ongoing Middle East conflict are adding fresh fuel to that fire rather than letting it cool.
Third, there’s a massive wave of new corporate debt issuance on top of all this, AI related companies alone are projected to issue as much as 1.5 trillion dollars in bonds this year. That’s an enormous amount of new competition for investor money flowing into the bond market, on top of what the government itself is already borrowing.
Put those three together, bigger deficits, sticky inflation, and a flood of new corporate debt, and you get sustained upward pressure on yields that one buyback announcement, however large, was never going to fully solve on its own.
This isn’t just an American story either
This yield pressure is showing up globally, which tells you it’s bigger than just US politics or US debt alone. Japan’s 10 year yield hit a 30 year high. France’s 30 year yield hit its highest level since 2008. Germany’s 30 year bund yield hit its highest level since 2011. When multiple major economies are all seeing long end yields spike at the same time, that’s a structural global story about inflation, debt loads, and fiscal strain, not a single country’s isolated problem.
And here’s the part that should genuinely confuse you if you’re not thinking in layers
Despite yields climbing back to fresh highs, the dollar is still sitting near multi month lows. Normally, rising yields make a currency more attractive, since investors earn more for holding it. That relationship is not holding cleanly right now, which tells you the market is weighing something else heavily against the dollar too, likely the same fiscal deficit concerns driving the yields higher in the first place, worry about the debt itself rather than confidence in the returns it pays.
Now, why does Nasdaq barely move through all of this
This is the exact question worth sitting with tonight, and it connects directly to intermarket analysis.