“Door Of Doom” Looms As 30 Year Yield Soars To 19 Year High After Two Huge Treasury Block Sales

Bond yields continued to move sharply higher today, driven in large part by the aggressive repricing in the oil strip as markets (finally) price in a lengthy disruption to Hormuz traffic which has pushed year-end prices higher by about $12 in the past month.

The result has been a spike across virtually all tenors:

• *US 2-YEAR YIELD RISES TO 4.11%, HIGHEST SINCE FEBRUARY 2025

• *TREASURY 5- AND 7-YEAR YIELDS RISE 10 BASIS POINTS ON DAY

• *US 30-YEAR YIELD RISES TO 5.195%, HIGHEST SINCE JULY 2007

… as can be seen below, with the 30Y yield rising above 5.19% and the highest since 2007

According to Bloomberg, the latest spike higher in 10Y yields which is reverberating across the curve…

… is due to a block of 23,000 contracts in 10-year bond June futures traded at a price of 108-25+ on CBOT.

A total of 1.34 million contracts traded so far in this session.

Two minutes later 20,000 was also blocked at 108-24+ with price action around the two trades consistent with sellers. 

The combined amount of risk weighting over the two trades equates to $2.8m/DV01.

On May 13, there were identical size block buyers at levels of 110-00 (20,000) and 109-30 (23,000).

The two sales Tuesday point to the unwind/loss liquidation of these long positions established May 13.

As Nomura’s Charlie McElligott notes, the resumption of investor focus on reaccelerating inflation (both due to 1–the obvious lack of progress with Iran and the Energy / Petrochem “supply shock” as emergency inventories are depleting rapidly, plus 2—signals of an “overheating” US economic risk ironically from the “demand” / FCI -side) have repriced the global central bank policy path “hawkish-ly” while FOMC outlook at the very least is “less dovish-ly” with high pricing of “No Fed Cuts” -scenario through YE and real Delta of the dreaded “Fed Hikes” -potential by YE too.

Bloomberg technical analysts note that the 30-year Treasury yield is right at a key technical level, a break of which targets 5.44% unless liability-driven investors step in to arrest the selloff. The 10-year yield may make a new range if the 4.66% level holds. 

But more importantly, the 30Y is about to rise above 5.20%, some 20bps higher than what Michael Hartnett warned in his last two Flow Shows is the “door of doom” red line for the bond market.

And stocks are starting to notice.