30-Year Treasury Yield Nears 6% as CTD Shift Threatens Fresh Long-End Selloff

The 30-year U.S. Treasury yield climbed to 5.68% on Monday, approaching recent highs, as strategists warned that a "cheapest-to-deliver" (CTD) switch in futures markets could trigger another surge in long-end yields. BNP Paribas strategists said rapid yield increases push the CTD toward longer-dated bonds. To keep portfolio duration stable, asset managers must sell futures longs or cover shorts, a forced deleveraging that intensifies selling pressure on long-end cash bonds. The current CTD is a bond maturing February 2045. Bloomberg analysis indicates the CTD could shift to a 2050-maturity bond if the 30-year yield approaches 6%. CFTC data show asset managers slashed ultra-long Treasury futures net longs by nearly 100,000 contracts in the week ended September 29, as the 30-year yield jumped from 5.28% to 5.62%. Sumitomo Mitsui strategist Monty Gandhi said ultra-long futures have completed their CTD switch, but long-bond futures still face duration-extension risk, leaving them exposed to a new round of selling if yields keep rising.