The U.S. bond market faces renewed pressure in 2025 as nearly $3 trillion in Treasury debt matures, much of it short-term notes. The Treasury is expected to issue longer-term bonds to roll over this debt, which could strain a market already grappling with massive issuance and elevated yields.
Treasury Secretary Janet Yellen faced criticism in 2024 for favoring short-term bills to manage financing costs. However, the shift to longer maturities poses risks, especially as traders anticipate smaller rate cuts from the Federal Reserve.
Yields surged in 2024, making it one of the worst years for bonds. The iShares 20+ Year Treasury Bond ETF (TLT) dropped over 11%, while the S&P 500 rose 23%. Experts like Tom Tzitzouris of Strategas Research Partners warn that managing this debt transition is a bigger challenge than budget deficits.
