30-year Treasury yields above 5% would not shock Bill Ackman

investmentnews.com:

Yields on 30-year Treasuries are on track for their largest quarterly jump since 2009, stoking anxiety that the bond rout of the past few months could reverberate across financial markets.

The long-bond yield has risen around 85 basis points since the end of June and touched about 4.81% Thursday, the highest since 2010. Pershing Square Capital’s Bill Ackman said he would not be shocked to see 30-year Treasury yields well into the 5% barrier, during an interview with CNBC on Thursday.

An array of forces have accelerated the Treasuries slump, and investors in longer-maturity bonds, which bear the biggest interest-rate risk, have suffered the most. 

A key trigger has been the Federal Reserve’s message that it will keep rates higher for longer. But the government’s increased borrowing to fund budget deficits, the move by Fitch Ratings to strip the US of its top credit grade and rising oil prices are also at work. The Bank of Japan’s willingness to let Japanese yields climb has been a factor too.

“We could see something break when you see this kind of volatility,” Thierry Wizman, director of global currencies and an interest-rate strategist at Macquarie Futures, said on Bloomberg Television on Thursday. 

Ackman said energy prices and interest rates moving up remain a concern.

US government debt has declined about 3.1% this quarter, for a 1.6% drop this year, according to Bloomberg index data through Thursday. Treasuries are heading for a record third straight annual loss, after sinking 12.5% last year. Long bonds have lost 12% since June.

So far, the economy and financial markets have proven relatively resilient in the face of the bond market’s struggles. While the S&P 500 Index has declined 6% from its 2023 high set in July,