Mon, Jun 1, 2026|Chris Igou

Uncle Sam Can't Find Any Buyers

Bond investors are calling the market's bluff...

Stock investors have been enjoying a multi-year bull market. But bond traders are selling... which means they see trouble ahead. Worse, bond traders are often right when these markets disagree.

Since the start of 2024, U.S. stocks have surged 58%. But the iShares 20+ Year Treasury Bond Fund (TLT), a basket of long-dated bonds, has fallen 13%.

It gets worse... This month, the U.S. 30-year Treasury bond yield briefly reached its highest level since the great financial crisis.

As a reminder, bond yields and bond prices move inversely. So as yields went up, bond prices cratered. Put another way, bond traders said "no thanks" to the current rate of compensation for U.S. debt. So they dumped their holdings in preparation for more risk – and higher rates – ahead.

These moves tell us one thing: The bond market has serious objections to the state of the U.S. markets.

Stocks may be rising. But investors just demanded the most compensation in nearly two decades to trust Uncle Sam with their money.

That means bond investors see high risk in the markets today. And Treasury bonds are still facing other bearish factors from here...

America's debt is out of control.

The U.S. is running at a roughly $2 trillion annual deficit. The cost of servicing interest has reached $1 trillion a year. This undermines confidence in America's ability to pay its debt in the longer term.

The central bank knows this. It's why the biggest buyer of U.S. Treasurys – the Federal Reserve – is no longer buying. New Fed Chair Kevin Warsh just took office and is already looking to shrink the central bank's massive balance sheet.

Foreign central banks are also big buyers of U.S. Treasurys... but they're losing confidence in these assets, too. Buyers like China and Japan are diversifying away from U.S. bonds.

Demand is falling. That means bond prices could keep falling, too.

Not to mention, Treasurys are competing with higher demand for corporate bonds...

Companies are racing to fund new AI infrastructure. Analysts estimate corporations will issue $2 trillion worth of new bonds this year.

Bond investors have also been spooked by recent inflation numbers and energy shocks. Oil sits near $89 a barrel. The spike in prices since the Iran conflict began has contributed to a three-year inflation high, based on consumer price index data.

With these trends, bond investors want higher compensation for locking up their money for 20 or 30 years. The "term premium" – the extra yield investors demand for longer-term bonds – surged for long-term bonds this month.

The 30-year yield has calmed down somewhat over the past two weeks. Still, this month's bond sell-off was dramatic. Take a look...

Again, rising yields mean falling prices. So this spike shows a massive sell-off in long-dated U.S. debt... followed by a swift reversal.

Long-term yields are becoming more volatile. And with a series of higher highs in yields, 30-year bond prices are trending lower.

All of this suggests we're at the start of a sell-off in U.S. government bonds... not the end.

The bond market doesn't panic easily. Now that it's cracking, investors need to pay attention.

Ignoring this market has historically been an expensive mistake.

Good investing,

Chris Igou

Editor's note: If this idea worries you, you need to hear what our team has discovered. It's a "Redline" signal designed to flash when this AI-driven bull market is coming to an end. In short, our research says a critical shift in the financial system will show when growth becomes unhealthy... And our CEO, Dr. David "Doc" Eifrig, believes this is one of the earliest warnings that will sound when the AI boom enters a dangerous phase.

Uncle Sam Can't Find Any Buyers

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