The 10-year U.S. Treasury yield topped 5% this past week, hitting the highest level since 2007 and blowing past the Congressional Budget Office’s forecasts of 4.1% for 2024. With $40 trillion in U.S. debt and $2 trillion in annual deficits, the Committee for a Responsible Federal Budget estimates that if yields remain more than 80 basis points above baseline projections, annual interest payments could reach $2.7 trillion by the end of the decade. Experts who previously downplayed debt concerns, including market veteran Ed Yardeni and former Biden economic adviser Jared Bernstein, are now expressing alarm about the risk of a fiscal crisis. Multiple factors are driving yields higher: global competition for bond investors’ capital, persistent deficits, and an increasingly unstable geopolitical environment.
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