The significant increase in U.S. long-term Treasury yields has drawn widespread market attention in recent years. As a benchmark for the global macroeconomy, America's long-term interest rates have substantial influence on asset pricing worldwide, capital flows, economic prospects, and exchange rates among major currencies. This article provides an in-depth review and analysis of recent trends in U.S. long-term rates, exploring their causes and potential future impacts.

I. Recent Trends in Long-Term Rates

Over the past several months, U.S. Treasury yields have risen across the board, with 10-year and 30-year yields hitting their highest levels since 2007. On October 30, they reached 4.895% and 5.051% respectively, having peaked at 5.02% and 5.18%. The market has reacted strongly to these rapid increases, with many concerned that stronger-than-expected economic data and the Federal Reserve's hawkish policies could sustain this high-rate environment.

Historically, U.S. Treasury yields from one month to 30 years collectively form the market's "benchmark" rate structure. Long-term rates (10 years and above) are less directly affected by Fed policy than short-term rates (under one year) and better reflect market expectations for future economic growth. When examining the relationship between nominal rates and real yields, changes in inflation expectations become particularly important.

Market data analysis reveals that this round of long-term rate increases has been primarily driven by rising real rates, with inflation expectations remaining relatively stable. The growth in long-term rates largely stems from increased market confidence in the resilience of U.S. economic growth.

II. Causes of Rising Long-Term Rates

The current rapid increase in long-term rates directly results from supply-demand imbalance. On the supply side, the U.S. Treasury has significantly boosted bond issuance, while on the demand side, major buyers like the Federal Reserve and foreign governments/central banks have reduced their purchases. Additionally, new developments in financial markets, such as increased short positions by hedge funds, have exacerbated the situation.

Changed expectations about future benchmark rates have also contributed, with markets anticipating a prolonged high-rate environment. Views about long-term inflation levels have further supported the rise in long-term rates.

III. Impacts of Rising Long-Term Rates

Higher long-term rates have increased unrealized bond losses for financial institutions and corporations. Commercial banks' unrealized losses have grown significantly, potentially raising liquidity risks. Furthermore, rising long-term rates may depress valuations for all risk assets, affecting stock market performance and corporate financing conditions. The high-rate environment could influence future investment decisions and consumer behavior, potentially challenging overall economic growth and fiscal health.

In conclusion, while the rise in long-term rates has reasonable economic foundations, their future trajectory remains highly uncertain. Investors and policymakers must closely monitor how these changes profoundly affect markets and economies to develop appropriate strategies for addressing current challenges.