Soaring US bond yields stoke fears of ‘hard landing,’ increase risk of recession

The surge in long-term Treasury yields is likely to keep interest rates high — jeopardizing the Fed’s long-crafted plans for a soft landing, Wall Street analysts said.

The yield on 30-year Treasuries, which is the annual interest rate that the US government pays on its debt obligations, briefly surpassed the 5% threshold on Wednesday before retreating to 4.89% after the Labor Department released its latest unemployment figures Thursday.

The high bond yields make it more expensive for consumers and companies to borrow money, thereby undercutting the economy and increasing the risk of a recession.

“Ultimately, the feedback effect starts to fuel fears that you’re going to have a hard landing,” RJ Gallo, a senior portfolio manager for Federated Hermes, told Bloomberg News.