30-year US Treasuries traded at over 5% for the first time since 2007 today as investors worry that a robust economy, sticky current inflation, high oil prices and long-term supply side changes could leave us with higher rates for much longer.

US JOLTS data was considerably stronger than expected by the market – with job openings increasing by their most in two years. Job openings were 690,000 higher – at 9.61 million.

There is a risk that Fed may be forced to start another hiking cycle if we get another wave of inflation – off a tight labor market, higher oil prices or other factors. The risk of policy mistakes is also now higher.

Volatility might increase – as markets react (possibly overreact) to new data – now that the largely accepted story of inflation being under control and rates being around their peak is questioned.

DCM issuers and investors might want to position themselves for the risk of materially higher volatility in a few months – during which liquidity and their options could be more limited.