Core Viewpoint - The surge in long-term U.S. Treasury yields, surpassing 5%, is causing significant market volatility and raising concerns about inflation and government fiscal health, overshadowing expectations of a Federal Reserve rate cut later this month [1][4][6]. Group 1: Market Dynamics - The U.S. stock market faced pressure with the Nasdaq 100 index down 0.8% and the S&P 500 index down 0.7%, as all major tech stocks declined [1]. - The Cboe Volatility Index (VIX) has risen from its recent lows, indicating increased market risk aversion [1]. - The rise in 30-year Treasury yields is part of a broader global bond market sell-off, reflecting investor concerns over expanding budget deficits and increased bond issuance [4]. Group 2: Investor Sentiment - The 5% yield level is seen as a critical psychological threshold for investors, prompting a reassessment of high stock valuations, particularly for interest-sensitive growth stocks [1][5]. - Historical data shows that when the 30-year Treasury yield breached 5%, it led to significant market reactions, with the S&P 500 index dropping 2.3% in May after a similar rise [5]. Group 3: Economic Outlook - The current market environment is complicated by political factors, including criticism of the Federal Reserve and potential changes to tariff policies, which could impact inflation and government revenue [6]. - Rising interest rates are raising concerns about future economic growth and the implications for corporate and consumer capital costs, which could negatively affect earnings growth in an already expensive stock market [6].