The current Treasury selloff bears eerie similarities to the 1994 bond market crash, when yields surged 240 basis points in 9 months. However, key differences make today’s situation more dangerous:
• Higher starting yields: Began at 4.5% vs 5.8% today
• Greater leverage: Hedge fund positions 3x larger
• Central bank divergence: Fed now stands virtually alone in its tightening campaign
“1994 was a contained crisis – this could be systemic,” warned former NY Fed President William Dudley. Critical parallels:
✓ Both began with “soft landing” expectations
✓ Mortgage markets were early casualties
✓ Emerging markets suffered collateral damage
But 2025’s unique risks:
→ 24T Treasury market vs 4T in 1994
→ Algorithmic trading amplifies moves
→ Geopolitical tensions complicate exits
