People Are Worried About the Long Bond

The yield on the 30-year Treasury climbed above 5.30 percent Monday, its highest level since 2007. This is a testament to the perceived strength of the U.S. economy, although you would never know that reading the financial press.

CNBC attributed the rise to “worries growing among investors about persistent inflation and government borrowing.” A version of that inflation anxiety thesis can be found almost anywhere you look. The ominous historical comparisons came quickly. Last week’s auction produced the highest 30-year borrowing cost since 2001. Monday’s secondary-market yield was the highest in 19 years.

The trouble with the alarming interpretation is that the market is not behaving as though investors are worried about persistent inflation or the government’s ability to finance itself.