Investors Flock to Treasury Market Amid Surging Yields

U.S. households have significantly increased their holdings in the U.S. Treasury market, reaching about $2.5 trillion from less than $1 trillion since the Federal Reserve began raising rates in 2022. This surge in ownership is the highest level in the past 25 years. The recent rise in the 10-year Treasury yield to almost 4.5%, the highest since 2007, has attracted households and real money investors. However, the increase in yields has led to a sell-off in rate-sensitive sectors and technology stocks, causing sharp weekly losses in the stock market. Higher borrowing costs are also impacting consumers and major corporations with maturing debt. The bond market has seen gains erased by rising yields, with negative returns for the year.