Has this ever happened to you? One time, my gym was like, \u201cHey, would you like to prepay your membership for two years in advance?\u201d And I was like, \u201cUh, no, why would I do that?\u201d And they were like, \u201cWell, we\u2019ll give you a discount.\u201d And I was like, \u201cBetter be one heck of a discount, \u2018cause what if you shut down?\u201d <\/p>\n
So I didn\u2019t do it. Lo and behold, the gym went bankrupt a year later.<\/p>\n
Thirty-year Treasury bonds are kind of like my shady old gym. Not the shadiness or the bankruptcy \u2014 but the fact they ask you to lock up your money for a long time.<\/p>\n
\u201cYou tie yourself up for 30 years, you\u2019re locked in,\u201d explained Stephen Laipply, global co-head of Bond ETFs at Blackrock. \u201cAnd so you\u2019re going to potentially demand a premium to take that risk.\u201d<\/p>\n
A few weeks ago, the yield on the 30-year T-bill hit 5%, which it has done only a few times in the last decade. This time, though, it\u2019s stayed above 5% \u2014 for about two weeks so far.<\/p>\n
It\u2019s the longest stretch over 5% the 30-year bond has had since 2007. What\u2019s the bond market trying to tell us?<\/p>\n
So much can go wrong in 30 years, and investors want to get paid more for that risk. Recently, they want to get paid extra more.<\/p>\n
\u201cYields have been rising and that\u2019s a signal that markets are becoming uncomfortable,\u201d said Ian Shepherdson, chairman of Pantheon Macroeconomics. \u201cFirst is the intractibility of the huge budget deficit that the U.S. has been running for some time.\u201d<\/p>\n