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U.S. Treasury yields have risen sharply in the past few weeks, with the benchmark 10-year Treasury yield breaking through 4.3% as of August 21. "This is the highest level since 2007. And pointed out that the sharp rise in U.S. Treasury yields occurred mainly at the longer end of the Treasury yield curve. U.S. Treasury short-term yields remained relatively stable in August 2023. The sell-off in U.S. Treasury bonds was not driven by the latest U.S. inflation data, as recent reports showed a significant slowdown in U.S. consumer price increases. "In fact, actual inflation looks like it has fallen below the Federal Reserve's (Fed) June 2023 forecast. The sell-off may not be attributed to any changes in market expectations about the future path of U.S. interest rates. So, what should the sharp rise in U.S. Treasury yields be attributed to? It is believed that there are three factors at work. First, because the U.S. economy is more resilient than expected in the current high-interest rate environment, some investors are re-adjusting the equilibrium or neutral interest rate for the next five to ten years. The neutral interest rate is the interest rate at which monetary policy neither accelerates nor slows economic growth. "Recently, the US market has raised the neutral rate to close to 4%, which is the highest level in a long time. I think this is the first factor driving the rise in US Treasury yields." The second potential driver is the increase in US Treasury issuance, which has changed the supply dynamics within the US Treasury market and surprised some investors. "The increase in Treasury issuance may lead to demand for higher Treasury yields." The last factor driving the rise in US Treasury yields may be some global factors. In particular, the Bank of Japan's announcement on July 28, 2023 that it will relax its control of the 10-year Treasury yield curve may have played a role. "For quite a long time, Japan has been the anchor point for global yields, helping to keep yields down. Now, the anchor point for global yields has moved up, which may also lead to higher US Treasury yields. For investors, a key point behind the rise in US Treasury yields is that the fixed income market looks increasingly attractive. If the US economic conditions deteriorate, the US will continue to inflate inflation. More and more countries are selling US Treasury bonds, which is unexpected for the Fed.