US government bonds are in one of their worst slumps ever, which is bad for bondholders, bad for the government's borrowing costs, and a growing threat to the dollar.

• The 10-year Treasury rate hit a 19-year high, and long bonds have lost most of their value since 2020 — a deeper drop than in the 2008 crash.
• Treasury Secretary Bessent is stuck: war spending keeps piling up, and he still has to borrow hundreds of billions more this quarter.
• The Iran conflict keeps whipsawing oil prices as Trump flips between escalating and backing off, feeding inflation fears.
• Japan's currency is so weak that Tokyo may be forced to sell US bonds to defend it, and Washington is scrambling to help before that happens.
• New 50% tariffs on Canadian cars push Canada toward selling its oil and minerals to China and Europe instead, chipping away at dollar demand.

Outlook: Markets now see another Fed rate hike as near-certain, which would deepen the bond rout and raise the odds of a messy unwind of the yen carry trade.