Morning from Copenhagen.

Long-end bond yields in the U.S. managed to stick above the key 4.5% and 5% levels in the 10y and 30y, respectively, yesterday—leaving a strong probability that yields will continue climbing. With few catalysts in the next two weeks to reverse this trend (unless the administration makes another U-turn on tariffs), we expect upward pressure to persist. Meanwhile, BTC finally broke above its all-time highs overnight—likely in response to the latest spike in long-end yields, which gained another push after yesterday’s auction.

While both the tail and bid-to-cover ratio were within normal ranges, the auction was broadly labeled “weak” by the media and market participants. So what really drove the sell-off in bonds—and the subsequent equity dip?

As we’ve noted over the past few days, markets remain long duration globally and short U.S. equities in size. This suggests that yesterday’s auction triggered a positioning squeeze, not a fundamental shift. Duration holders were likely hoping for stronger demand to signal that the Treasury market can absorb the wave of future issuance. That didn’t materialize—so bonds sold off.

We still think equities will move higher despite the short-term wobble. Equities typically respond positively to more issuance—just not when yields rise too quickly. That’s when capital turns to non-fiat bets.

Chart 1a: The 20y Auction Was a Nothingburger