Treasuries Lose Their Anchor as Real Yields Break Higher

ING warns that the recent selloff in U.S. Treasuries is becoming more structurally concerning, as rising real yields—not inflation expectations—drive long-end rates sharply higher. 

• The U.S. 10-year Treasury yield climbed above 4.65%, with ING warning an overshoot toward 5% can no longer be ruled out.
• Unlike prior inflation scares, the recent move has been driven primarily by higher real yields, signalling either stronger growth expectations or deteriorating demand for duration.
• Treasury markets failed to attract major buyers even after breaching the historically attractive 4.5% threshold.
• ING argues that even a reopening of the Strait of Hormuz may not bring yields sharply lower if real rates remain elevated.

The implication is significant: markets may be entering a regime where U.S. yields no longer fall automatically during geopolitical stress.