30-Year Treasury Yield Nears 5% After Warsh’s Fed Debut

The 30-year U.S. Treasury yield approached 5% on Wednesday, closing in the high-4% range on roughly 20 trading days over the past decade, according to Thornburg Investment Management.

Federal Reserve Chair Kevin Warsh left the policy rate unchanged at his first Federal Open Market Committee meeting and delivered a hawkish tone. Thornburg noted Warsh plans to review the Fed’s communication, balance-sheet and data policies, a process the firm expects could produce short-term market volatility through the end of 2026.

The combination of elevated long-term yields and changes to Fed guidance has increased interest in actively managed fixed-income funds that can adjust duration and credit exposure faster than index-tracking funds.

Thornburg highlighted two actively managed ETFs: the Thornburg Core Plus Bond ETF (TPLS) and the Thornburg Multi Sector Bond ETF (TMB). As of March 31, TPLS held 322 positions, had a 30-day SEC yield of 4.38% and an effective duration of 6.3 years, with net assets of $20.1 million and a 0.45% expense ratio. TMB reported a 30-day SEC yield of 4.40% and an effective duration of 4.2 years, with net assets of $177.9 million and a 0.55% expense ratio.

Corporate borrowing related to artificial intelligence is rising. Thornburg estimated AI-related issuance now represents about 2% to 3% of the high-yield market, up from under 1%. Data-center operators are issuing debt to expand computing capacity, and established software firms are selling bonds to fund competitive initiatives. Credit spreads remain tight, and Thornburg emphasized the importance of bond-by-bond research to identify weaker credits.

Thornburg’s research noted that while the current mix of higher long-term yields and a Fed policy review is in place, managers able to move quickly on duration and credit exposure may be relatively better positioned than funds tied to fixed benchmarks during the period of policy review.