I’ve been keeping an eye on the 30-year U.S. Treasury yield lately. As of July 22, the 30-year U.S. Treasury yield is around 5.15% and has stayed above 5% for more than ten consecutive trading days, marking the longest high-level run since 2007. And this isn’t the first time this year. So far in 2023, there have been nearly 30 trading days where the 30-year Treasury yield exceeded 5%. In my opinion, the market is shifting its focus from “Will the Fed cut rates next?” to long-term concerns about U.S. inflation and fiscal issues in the years ahead. Lending money to the U.S. government for 30 years? Investors now want higher interest rates before they’re willing to lock up their funds for that long. Currently, the market is mainly worried about three things: 1. **Inflation** Short-term data may fluctuate, but long-term capital is more concerned about whether prices can truly return to low levels in the future. If inflation remains elevated over the long term, the purchasing power of fixed coupons will keep eroding, and yields will need to be higher. 2. **Debt issuance** The U.S. fiscal deficit is still significant, and more debt will need to be issued in the future to finance it. With an increase in Treasury supply, the market demands higher yields to attract funds. 3. **Term risk** Thirty years is a long time, and there are countless variables in the future regarding the economy, policies, debt, and global capital flows. The longer the time horizon, the higher the risk premium investors demand. So, in my view, the repeated climb of the 30-year Treasury yield above 5% sends a very clear signal: The market is asking the U.S. to pay higher interest rates for the uncertainties of the next 30 years. This is still far from a crisis, but the longer high rates persist, the more pressure it will put on U.S. finances, corporate financing, mortgages, and asset valuations.