Trump is facing a new inflation warning from the bond market, adding to his midterm challenges
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- Trump sees 10‑year Treasury yields climb to 4.44%, up from 3.95% before the Iran war, tightening borrowing costs for his administration.
- Iran war‑driven energy price spikes have pushed mortgage rates to a nine‑month high and slowed auto sales.
- Jessica Riedl of the Brookings Institution says the national debt service cost has tripled since 2021 to over $1 trillion a year, and Trump’s tax cuts could add $5 trillion to deficits over a decade.
- Kent Smetters of the Penn Wharton Budget Model estimates 60% of the recent 30‑year Treasury yield rise reflects expectations of continued large‑scale borrowing, with 40% tied to inflation from the Iran war.
- U.S. energy supplies remain tight, with crude inventories down 900 million barrels, further feeding inflation pressures.
Why it matters: Republican candidates risk losing votes as mortgage rates climb to nine‑month highs, while higher Treasury yields raise the cost of servicing the $1.8 trillion annual deficit, tightening the federal budget.
