Peter Schiff warns the US Treasury is gearing up to make a critical mistake, but he sees an off-ramp. Are you ready?

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Peter Schiff has been bearish about the U.S. economy for a long time, and his warning posted to X on Aug. 31 is just the latest in a long line of dire predictions about the future of the stock market and the American economy (1).

Schiff sounded the alarm on a concerning trend in the Treasury market, specifically bonds.

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"The 10-year Treasury yield is 4.75%, the highest since Jan. 2025," he wrote. "When the yield rises above 4.77%, it will be the highest since 2007. However, in 2007 Treasuries were still in a bull market, with yields headed lower. Now they're in a bear market, with yields headed much higher."

With Treasury prices falling as yields rise, current holders of long-term Treasuries face the risk of substantial mark-to-market losses, or when the unrealized price of an asset falls below its initial purchase price.

But Schiff's warning has much bigger implications. When the 10-year yield last rose above the 2007 threshold, it was already falling from a peak of 5.3% as the credit crisis developed and the Fed cut rates (2).

But with the bond market now in a bear market, Schiff believes yields are likely to trend up , not down. This could complicate efforts by the Trump Administration to reduce long-term borrowing costs, and suggests that moves like the Treasury's increase in the purchase of longer-dated securities may not turn the tide (3).

It also means mortgage rates are expected to remain high, continuing to put a drag on the housing sector and on consumer spending. Meanwhile, stock prices could face downward pressure both as higher risk-free rates make stock investing less attractive and as the present value of future corporate profits falls due to stubbornly high interest rates.

Schiff subsequently posted on X that: "The only way to slow the rise in long-term Treasury yields is for the Fed to ramp up QE. That just means more inflation and even higher bond yields later, but that's the choice politicians always make. (4)"

However, QE, or quantitative easing, may not be the choice the Fed makes this time.