Global Risk Assets Under Pressure as U.S. Treasury Yields Rise

On May 18, Jin10 reported that a research note from CITIC Securities highlighted significant movements in U.S. Treasury yields. On May 15, the 10-year U.S. Treasury yield surpassed 4.5%, while the 30-year yield exceeded 5.0%, breaking two key psychological thresholds. Concurrently, long-term interest rates in major developed markets such as the UK, Japan, and Germany also rose, putting global risk assets under pressure. According to Jin10, CITIC Securities attributes the recent rise in interest rates to several factors: the broad increase in U.S. inflation data, the "Warsh shock" muscle memory, the stressed supply of U.S. Treasuries, political turmoil in the UK, and concerns over capital outflows triggered by rising Japanese bond yields. As a global asset pricing anchor, the significant rise in long-term U.S. Treasury yields is expected to strengthen the U.S. dollar, negatively impact growth stock valuations, and pressure precious metals and long-duration credit assets, while also causing liquidity shocks in emerging markets. CITIC Securities notes that the market has previously overlooked risks related to oil prices and inflation. However, with global crude oil inventories continuously depleting, high levels of oil prices, inflation, and interest rates may persist. Future focus will be on developments in the Strait of Hormuz and policy signals following Kevin Warsh's appointment.