Bond market selloff continues. What gives?

Yields on 10-year Treasurys rose even higher Wednesday, briefly hitting 4.25%

article-image

Things/Shutterstock modified by Blockworks

share


This is a segment from the Forward Guidance newsletter. To read full editions, subscribe.


There is something going on in bond markets.  

Yields on 10-year Treasurys rose even higher Wednesday, briefly hitting 4.25%. Two-year yields are also on the rise, reaching 4.07% Wednesday afternoon. (Remember, bond prices and yields are inversely related.) 

What gives? A few things. Probably. 

The first is the election. Polls are still saying the race between Trump and Harris is more or less a coin toss, even as betting markets continue to favor Trump. One theory is that bond markets are anticipating a Republican sweep and are reacting as such. There’s fear that Trump’s plans (higher tariffs, tax cuts, a crackdown on immigration) could send the deficit higher, so it makes sense that Treasurys are tanking.

I’d personally give this theory some weight. But I think the main thing dragging down bond markets are fundamentals. 

As we also covered yesterday, economic data is strong. Maybe even too strong, or at least strong enough that analysts are questioning whether the Fed went too far in September. We know committee members said they see rates ending the year another half-point lower, but the market has its doubts. Higher interest rates means higher Treasury yields. 

And then there’s the national debt. The federal deficit hit $1.8 trillion earlier this month. More debt = more bonds. Higher supply = lower demand. You get the idea. To be clear, I do think concerns about rising national debt are impacting bonds, but I think it’s a concern that goes beyond a potential second Trump presidency. 

As always, this isn’t investment advice, but I think the flash sale on bonds might go on for a bit longer.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Unlocked by Template (11).png

Research

Union’s technical design brings measured improvements to crosschain interoperability. By combining a consensus-verified hub with novel constructs like state lenses and ZK proofs for client updates, Union achieves an interoperability protocol that is highly performant, trust-minimized, and scalable.

article-image

Camp is looking to onboard licensors and creators to monetize their content for AI agents

article-image

The US regulator will use Nasdaq’s system to detect manipulation across derivatives and prediction markets

by Blockworks /
article-image

SOL and HYPE have rebounded, dYdX course corrects (again)

article-image

Over 100 crypto firms and advocates urge Congress to shield open-source builders and non-custodial providers

by Blockworks /
article-image

The probabilities app is finding mainstream success

article-image

A stock by any other name — even “token” — is still a security