The United States is paying more to borrow money than it has in nearly two decades. The 30-year Treasury yield has climbed to roughly 5.23% to 5.34%, a level not seen since 2007, while the 10-year yield has pushed to around 4.79% to 4.80%. Multiple factors are driving yields higher: persistent inflation between 3.4% and 4.1%, Middle East tensions pushing oil prices higher, and massive corporate debt issuance tied to AI infrastructure. The Federal Reserve has held its policy rate steady between 3.5% and 3.75%, with markets now pricing in a 60% to 65% probability of a rate hike at its September 16 meeting. The US national debt now exceeds $40 trillion, and every basis point increase in yields translates into billions of additional dollars in annual interest payments. Bond yields in Japan, the UK, and Germany have also reached new highs, and US mortgage rates have significantly cooled housing activity.
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