Global Bond Yields Surge as War, Debt Rattle Markets — SkimNews
Get the Finance newsletter
Daily finance — markets, central banks, M&A, the prints that move money. Free.
- U.S. Treasury yields have spiked, with the benchmark 10-year hitting its highest level in nearly three years as investors price in war-driven inflation and the $40 trillion national debt milestone reached last month
- The US-Iran war has dragged past six months since President Trump struck Iran in late February, driving energy costs; August was the most expensive August for US gas prices in history, according to AAA, and diesel has spiked 51% since the conflict began
- The sell-off has gone global: Germany's 10-year yield hit levels unseen since 2011, the UK's 30-year yield hit its highest since 1998, and Japan's 10-year bond crossed 3% for the first time since October 1996
- Net interest on the US debt has reached $931 billion this fiscal year, already exceeding the $804 billion spent on national defense, with the Peter G. Peterson Foundation projecting $16 trillion+ in interest spending over the next decade
- Tech companies spending trillions on AI infrastructure are crowding out Washington's borrowing in the bond market, adding fresh pressure on Treasury yields
- Federal Reserve Chairman Kevin Warsh sounds more open to acting on rates, with investors expecting the Fed to seriously consider raising rates at its September policy meeting
Why it matters: With the US already spending $931 billion on net interest this fiscal year — more than the $804 billion spent on national defense — every additional basis point in Treasury yields adds billions to debt service, while also raising mortgage and business borrowing costs for American consumers. The Federal Reserve now faces the unusual prospect of potentially raising rates to fight war-driven inflation, a painful policy stance that bond investors say is the only credible way to break the doom loop.
Ask SkimNews
