While New York Fed President John Williams credits a strong economy for surging Treasury yields, veteran investor Peter Schiff argued that inflation expectations, fiscal concerns and fading confidence in the Federal Reserve are behind the rise.
The Case Against the ‘Strong Economy’ Narrative
“It’s ridiculous to claim that Treasury yields aren’t rising due to increased inflation expectations, a loss of confidence in U.S. fiscal policy, declining Fed credibility and questions over its independence, or de-dollarization,” Schiff said in a post on X Wednesday.
“Those are the most obvious reasons for the rise.”
New York Federal Reserve President John Williams told CNBC on Wednesday that rising yields reflect “a strong U.S. economy and a strong economic outlook fueled by big investments” in artificial intelligence, data centers, and technology.
Not Every Country Is Rising the Same Way
Schiff challenged the “rising yields are a global phenomenon” defense, noting Switzerland’s 10-year yield remains under 45 basis points, roughly where it stood four years ago, despite the same global growth backdrop.
“If it’s just about governments competing for capital, Swiss yields should be rising too,” Schiff said, adding that many countries beyond the U.S. “have issued too much debt” and will eventually “resort to inflation to repudiate it.”
Japan’s Yields Rising
Japan’s 10-year yield crossed 3% for the first time since 1996 this month, a 30-year high, pushed higher as investors grew concerned about inflation, the government’s fiscal health, and mounting pressure on the central bank to raise interest rates sooner.
The country’s government debt stands at roughly 204% of GDP, the highest among major economies, according to the International Monetary Fund.
A Fed Rate Hike Looms
In the U.S., the 30-year Treasury yield has traded above 5% for 56 trading days in 2026, the longest such streak since 2006. The 10-year yield, meanwhile, hit 4.8%, the highest level since January 2025.
The move comes as the U.S. national debt climbs above $40.02 trillion.
According to Polymarket, traders currently put the odds of a Fed rate hike at the September meeting at 50%, rising to 65% for October.
Price Action: The State Street SPDR S&P 500 ETF Trust (NYSE:SPY) closed 0.09% higher on Wednesday at $765.87 and gained 0.11% in early pre-market trading, while Invesco QQQ Trust (NASDAQ:QQQ) closed 0.23% higher at $709.24 and rose 0.03% in pre-market.
The Invesco QQQ Trust has a Momentum score in the 67th percentile, according to Benzinga edge rankings.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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