Major: Treasury Market Is Functioning Normally

Steven Major argues that the global bond selloff reflects shifting interest-rate expectations rather than US fiscal stress or Treasury market dysfunction. He says persistently high oil prices could force more central-bank tightening, and the dollar could weaken if the US economy cools. He differentiates Japan, where BOJ hikes drive yields higher, from China, where disinflation makes bonds a safety choice, and treats geopolitical anxiety as a new normal. - Steven Major says higher Treasury yields are driven by a swing from three Fed cuts priced to a hike, not US fiscal dysfunction. - Treasury swap spreads are not widening, signaling the Treasury market is functioning normally. - Persistently high oil/energy prices could force central banks including the ECB to hike again. - The dollar could decline if the US economy cools alongside negative structural and political factors. - Japanese yields are rising because the BOJ is almost certain to hike. - China's disinflationary backdrop makes its bonds a safety choice. - Geopolitical anxiety is now a permanent backdrop that markets have adjusted to.