Concerns over fiscal policy and increasing debt are driving bond yields higher in May 2025. The 30-year Treasury bond yield reached 5.15% recently, nearing its October 2023 peak, and closed the week around May 23, 2025, at 5.04%, up 14.1 basis points, according to Dow Jones Market Data.
The Dow Jones Industrial Average has shown volatility, reflecting investor worries that rising yields could negatively impact stocks and other assets. Moody's downgraded the United States' credit rating to Aa1 from Aaa on May 16, 2025, citing expectations of rising deficits and interest payments. The 10-year Treasury yield also rose, surpassing 4.60% before settling at 4.52% on May 23, 2025.
According to reports, a 10-year yield above 4.5% has historically been problematic for investor sentiment. Rising long-term real yields have sparked concerns amid lowered economic growth expectations, with bond investors increasingly uneasy about the U.S.'s fiscal situation. A sustained break above 5.15% on the 30-year bond could potentially push yields even higher. The speed of the yield movement remains a key factor for stocks; a rapid rise in yields could pose a significant problem for the market.