U.S. Treasury yields, markets, Scott Bessent

Treasury yields face a key test at 4.8%, with a sustained move above that level potentially creating “meaningful problems” for other asset classes, according to Matt Maley, chief market strategist at Miller Tabak + Co.

“We remain concerned about the Treasury market…as rising fiscal deficits, massive debt issuance, and heavy corporate borrowing continue to pressure long-term yields… while Treasury Department jawboning has failed to produce the desired decline in rates (at least so far),” Maley said in a note over the weekend.

A sustained move above 4.8% on the 10-year Treasury yield — which marks the the high reached in January 2025 — “would be particularly concerning,” he said, as it could begin to create broader problems for markets and signal that fiscal concerns are overwhelming policymakers’ attempts to influence borrowing costs.

Maley said recent efforts by the U.S. Treasury Department and Secretary Scott Bessent to talk yields lower have so far failed to generate the desired response. The effort came as investors were heavily short Treasurys and summer trading conditions were relatively thin, with policymakers hoping verbal intervention could trigger a meaningful bond rally.

Instead, the episode underscores the growing difficulty of addressing market concerns without tackling the underlying fiscal pressures, he highlighted. The U.S. budget deficit and national debt, now above $40 trillion, are becoming increasingly difficult for investors to ignore, while the government is competing with large volumes of corporate borrowing for investor demand.

More than $8.4 trillion of U.S. government securities are scheduled to roll over between now and year-end, while September could be a record month for high-grade corporate issuance, according to Maley. Goldman Sachs recently revised its forecast for USD investment-grade issuance in 2026 upward to $2.3 trillion.

The pressure is not confined to the U.S. Japan, the U.K., France and other developed economies face significant fiscal challenges, adding to a broader shift in global bond markets as investors demand greater compensation for absorbing government debt.

“None of this means the bond market will move in a straight line,” Maley said, noting that bearish sentiment and stretched positioning could still trigger a sharp rally in Treasury futures. Any such move, however, could prove tactical rather than mark a reversal of the longer-term trend.

The 5% level has become widely watched for the long end of the Treasury curve, but Maley said the market’s thresholds have repeatedly shifted higher, from 4.4% to 4.5%, 4.6% and 4.7%.

A sustained break above 4.8% could have repercussions well beyond bonds. Michael Chen, general manager of Noah ARK Hong Kong, said a disorderly rise in long-term Treasury yields could trigger repricing across assets that depend on long-term cash flows, including ultra-long-duration bonds, high-valuation growth stocks, commercial real estate and some private assets.

Chen said the…