According to The Kobeissi Letter, a sustained rise in US government bond yields is beginning to create systemic risks for the broader economy.

Assessment by The Kobeissi Letter

The publication warns that the yield on 30-year US Treasuries climbed to 5.19%, the highest level since July 2007, elevating concern about financial stability.

Market context and rate expectations

Against the backdrop of conflict with Iran and crude oil trading above $100, market participants have significantly revised expectations for the Federal Reserve.

• Markets now see a higher probability of an additional Fed rate increase, replacing forecasts of four cuts in 2026.
• Average mortgage rates in the United States have risen to 6.68% and could surpass 7% if yields remain elevated.
• The national debt of the United States has reached $39 trillion, amplifying sensitivity to higher borrowing costs.

Implications for lending, equities and crypto

Higher sovereign yields translate into more expensive borrowing for households and businesses, which in turn pressures corporate valuations and investor risk appetites.

The Kobeissi Letter argues that pricier credit conditions increase downside risks for both equity markets and the cryptocurrency sector by tightening financing and reducing disposable income.

Outlook

Analysts cited by the publication emphasize that if yields stay elevated, the transmission to credit markets and asset prices could intensify, prompting closer monitoring by policymakers and investors.