The sell-off of U.S. Treasuries accelerates, with 5% in sight!

As the inauguration date of President-elect Trump approaches, inflation concerns are rising, and U.S. Treasury bonds are "in a continuous decline."

With only two weeks left until Trump's inauguration, investors are increasingly worried about his proposed tariff policies and their potential inflationary effects. Over the past month, the yields on 10-year and 30-year U.S. Treasury bonds have both risen by about 50 basis points.

On Tuesday, the yield on the 10-year U.S. Treasury bond climbed to 4.695%, reaching a new high since April of last year.

The yield on the 30-year U.S. Treasury bond closed at 4.836% on Monday, the highest level in 14 months, and further increased to 4.919% on Tuesday.

In addition to tariffs, the bond market is also concerned that Trump's domestic tax cuts, elimination of tips, and social security tax plans may lead to increased government borrowing. Some institutions estimate that Trump's proposals could add $7.8 trillion to U.S. debt over the next decade.

Gargi Chaudhuri, Chief Investment Strategist and Portfolio Strategist for the Americas at BlackRock, stated:

"We need some certainty regarding fiscal policy, and as the inauguration ceremony takes place, we will hear more relevant information. The unknowns regarding more U.S. debt issuance will keep buyers cautious."

Moreover, the latest ISM Services PMI data showed that U.S. service sector activity grew more than expected, dampening expectations for Federal Reserve rate cuts and further raising inflation concerns.

This week, to commemorate former U.S. President Jimmy Carter, the U.S. Treasury has advanced its bond auction activities. Ian Lyngen, an analyst at BMO Capital Markets, noted that the change in the auction schedule "concentrates supply in the first half of this week, leading to a heavier trading atmosphere."

Several Wall Street analysts predict that U.S. Treasury yields still have room to rise, even aiming for 5%.

Peter Tchir, Head of Macro Strategy at Academy Securities, has raised the near-term target for the 10-year U.S. Treasury yield to 4.75%. Jim Bianco, President of Bianco Research, predicts that the average yield on the 10-year U.S. Treasury bond will reach 5.23%. Steven Ricchiuto, Chief Economist at Mizuho Securities, believes that the 10-year U.S. Treasury yield could reach around 5% Despite the steady rise in yields, some investors still see opportunities. According to JPMorgan Chase's latest client survey, long positions in 10-year U.S. Treasury contracts have increased to the highest level in over a year, but short positions have also grown in the past week