A prominent American economist and seasoned investor, Peter Schiff, stated on Monday that the bond market has officially entered a structural bear market, a shift he believes will drive US Treasury yields well beyond the peaks recorded since 2007. He argues that given the substantial expansion of US national debt since those earlier yield highs, the current surge in yields is merely in its infancy.

The US 10-year Treasury yield touched 4.78% on Monday, marking its highest level since 2007. "However, in 2007, Treasury bonds were still in a bull market with yields on a downward trajectory. Now, they have transitioned into a bear market, and yields are poised to climb significantly," Schiff remarked in a post on X. He further noted that once the 2006 high of 5.15% is breached, the next targets would be the 6.44% peak from 1999 and the 8.03% high from 1994. He added that in 1994, US national debt was "well below $5 trillion," whereas it now exceeds $40 trillion.

Schiff argues that the Federal Reserve's only genuine lever to curb the rise in long-term yields is to intensify quantitative easing, but he contends that this path merely trades one problem for another. "It will only lead to higher inflation, and subsequently, bond yields will climb even further, but this is the choice politicians always make," he stated. "This is also why we remain bullish on gold."

Amid persistent investor concerns over inflation, the 30-year Treasury yield rose to a 19-year high this month, pushing up long-term borrowing costs across the market. According to CME FedWatch data, following hawkish remarks by Federal Reserve Chairman Kevin Warsh at the Jackson Hole symposium on Friday, the probability of a September rate hike has climbed to 66.4%.

When a user asked what a 10-year Treasury yield of 8% would mean for mortgages, Schiff responded that it would push mortgage rates above 10%.