U.S. Treasury bonds faced significant selling pressure, causing the 30-year yield to rise back above 5%.

On Tuesday, there was a widespread sell-off in the US Treasury market, especially as long-term bond yields surged, sounding the alarm for stock market investors. By the close of trading, the 30-year US Treasury bond yield rose to nearly 5.02%, the highest level since May 23. The main driver behind this spike in yields came from expectations based on the latest inflation data. The Consumer Price Index (CPI) rose by 0.3% in June, the largest monthly increase so far this year; the year-over-year inflation rate also increased from 2.4% last month to 2.7%, while the core CPI annual rate rose from 2.8% to 2.9%. The data showed that prices of goods such as furniture, toys, and appliances, which are easily affected by tariffs, accelerated, suggesting that the impact of tariffs on inflation is beginning to show. When long-term bond yields rise above 5%, it often means higher borrowing costs, affecting everything from mortgage rates to corporate bond issuance rates. The 30-year yield is widely regarded as a barometer of macroeconomic and fiscal health. This jump not only reflects concerns in the bond market about rising inflation, but also raises expectations for the Fed to raise interest rates or maintain higher rates for longer periods. Although Fed funds futures traders are still betting on two 25 basis point rate cuts before the end of the year, the bond market's adjustment is changing this expectation. Economist Lauren Henderson of Chicago's Stifel Nicolaus pointed out, "The market now expects that the Fed will have to maintain higher rates for a longer period, and the window for rate cuts in 2025 is gradually closing." She believes that if the new round of tariffs takes effect on August 1st, it could further exacerbate inflationary pressures. On Tuesday, not only did the 30-year and 20-year US Treasury bond yields surpass 5%, even the 3-month Treasury bill yield rose to 4.345%. Under pressure from the bond market, most sectors of the US stock market saw declines: the Dow fell by 0.98%, the S&P 500 fell by 0.40%, and the small-cap Russell 2000 plummeted by 1.99%. Only large-cap tech stocks showed relative resilience, with the Nasdaq rising slightly by 0.18%.