The resilience of the US economy is driving volatility in the US treasury market

The US treasury market has experienced significant volatility, which has implications for US equities. The increase in yields is driven by several factors, including a change in inflation outlook, strong retail sales reports, and the perception that the US economy can handle higher interest rates. The re-pricing of the treasury market is driven by the belief that the Federal Reserve can keep rates higher for longer. The issuance of federal government debt, estimated to reach $2 trillion in 2023, has also contributed to falling bond prices and rising yields. The higher yields may result in increased spending on interest payments for the federal government and potential implications for economic growth.