Trump’s ‘liberation day’ sweep of tariffs left global markets in turmoil. EPA-EFE/JUSTIN LANE
A crisis in the U.S. bond market was once enough to spook President Donald Trump away from his tariff policies, but now, the market is once again "collapsing" and reaching levels even worse than before, according to experts.
On Friday, the official X account for market analysis outlet, The Kobeissi Letter, posted another "warning" about the "intensifying" crisis taking place in the bond market, as it reaches rates not seen since a month after Trump's Liberation Day announcement. It also warned that the "euphoria" seen elsewhere in the market in the face of the administration's chaotic policies was coming to an end as reality sinks in.
Due to these circumstances, they predicted that inflation would be here to stay, and that mortgage rates would also begin to climb.
"Our 5th warning: The bond market crisis is intensifying," the outlet posted. "The US 10Y Note Yield is now officially above 4.55 percent for the first time since May 2025. After weeks of euphoria, the market is beginning to react today."
The post continued: "As we have been stating for the last few weeks, the current situation in the bond market is unsustainable. We are now above levels seen when President Trump implemented a '90-day tariff pause' in April 2025 due to a collapsing bond market. Furthermore, the market now sees a 60 percent-plus chance that the Fed's next move is an interest rate HIKE, with rate cuts entirely priced-out. We expect to see 7 percent-plus mortgages next, all as auto loan delinquencies have reached 32-year highs. Inflation is back and higher rates are coming."
The situation could pose a major initial test for Trump's newly confirmed Federal Reserve chairman, Kevin Warsh, whom the president once claimed he was nominating explicitly to cut interest rates to levels favorable to his business allies.
In a recent report on the bond market situation, Seeking Alpha argued that the changing rates are the result of the markets pricing in an impending rate hike from the Fed, despite Trump's past demands.
"The message is clear," the report stated. "The short-term rates are starting to price a Fed hike—that's what happens during an inflationary shock... The 30Y yields are starting to price an unsustainable US fiscal situation. Thus, overall, the bond market is sending a serious warning."
The report further argued that the strong stock market is the result of a "melt-up" situation, driven by delusional hopes about the Iran war coming to a close, rather than any of the real facts at hand.