Key Takeaways:
The United States now pays more to borrow for 30 years than Germany or Japan, a reversal that Peter Schiff attributes to a structural debt crisis rather than geopolitics.
The 30-year Treasury yield sits at 5%, a near 20-year high, as the U.S. faces $12 trillion to $13 trillion in debt maturing within the next year that must be rolled alongside roughly $3 trillion in new deficit spending.
"It's the debt," Schiff said on his podcast. Strip away the geopolitics and energy narrative, he argued, and what remains is a sovereign borrower asking creditors to fund an ever-larger pile at a price those creditors increasingly reject.
The 10-year yield closed at 4.445% on May 27, while the 30-year touched 5.18% on May 19 before settling near 5%. Real yields tell the same story without inflation noise: the 30-year TIPS yield stands at 2.72%, the 10-year real yield at 2.09%. The U.S. now pays more to borrow for three decades than Germany, Japan, and most of Europe — only the UK is higher, and Schiff expects American yields to overtake British gilts soon.
The implications extend beyond bondholders. The S&P 500 trades at 21 times forward earnings, above its 10-year average of 19, making equity valuations vulnerable as risk-free rates climb. Fed funds futures now price a 45% probability of a rate hike by year-end and less than 1% odds of a cut, a stark reversal from just weeks ago when markets expected no tightening.
The Treasury's refinancing challenge is structural. Roughly one-third of the $39.3 trillion national debt matures within 12 months, forcing the government to place $12 trillion to $13 trillion of paper into a market where foreign demand is shrinking. Schiff described the Treasury's bond buyback program — in which the department repurchases long-dated bonds no one wants, funds them with short-term bills, and the Fed absorbs those bills — as "a QE program that's going on, surreptitiously." The mechanical effect is more short-duration issuance, more central bank balance-sheet absorption, and a long end left to find its own clearing price.
The Yield Trajectory
Schiff has predicted 30-year yields could push above 7%, and on the podcast he went further: "Who's to say we can't go to a 30-year high? There's a big difference between the 20-year high. The 30-year high is over 8% on a 30-year." The current 5% is already a near 20-year high, and the last time the 30-year traded above 5% for an extended period was in 2007, preceding the global financial crisis.
JPMorgan offers a calmer base case, expecting the 10-year to settle between 4.00% and 4.50% in 2026. But the divergence between Wall Street's consensus and the bond market's price action has widened in recent weeks as the refinancing calendar looms.
Portfolio Implications
The iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT), which holds long-dated paper at a 15 basis point expense ratio, has lost 27.4% over five years and trades at $85.60. More than $4.49 billion has flowed out of TLT year to date, while short-duration vehicles like BIL have attracted over $7 billion — a rotation that aligns with Schiff's thesis even among investors who would never quote him.
For the classic 60/40 retirement portfolio, the duration math is uncomfortable. Long Treasuries are supposed to be the ballast. If Schiff is even partially right, the ballast is itself a directional bet on a fiscal path the market is repricing. What to watch is the refinancing calendar, foreign holdings data, and whether the long end keeps climbing on weeks when oil and war headlines argue the other way.
This article is for informational purposes only and does not constitute investment advice.
