Analysis: Lower Treasury yields could require a weaker economy. Trump won't fix them — SkimNews
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- 10-year U.S. Treasury yields have risen roughly 0.75 percentage points over the past six months to hover near 4.8%, the highest level of the second Trump administration, despite White House efforts to bring them down
- Trump administration policies — soaring deficits, Fed tolerance of above-target inflation, and Treasury market interference — are adding credit-risk-like dynamics to U.S. debt, according to Allianz chief economist Ludovic Subran
- Mortgage rates have climbed to nearly 6.8% in tandem with the 10-year yield, raising costs for American homebuyers and auto-loan borrowers
- Norway's sovereign wealth fund is weighing shifting roughly $80 billion out of government debt into mortgage-backed securities and other bonds, citing uninteresting returns after inflation and hedging
- U.S. borrowing keeps ballooning — the Congressional Budget Office now projects a $2.1 trillion fiscal-year deficit exceeding 6% of GDP, with the $41.1 trillion debt ceiling projected to be hit between late winter and mid-summer 2027
- AI-driven corporate debt is adding to the squeeze at the long end of the yield curve, with JP Morgan estimating five major tech firms plus Nvidia and their data-center vehicles have issued about $320 billion in debt so far this year
- NY Fed President John Williams argues the rise in real yields — 10-year TIPS up 67 basis points to 2.43% with flat inflation breakevens — reflects economic strength rather than acting as a drag on it
Why it matters: American households face a 6.8% mortgage rate tied to the 10-year Treasury at 4.8%, while Norway's sovereign wealth fund weighs pulling $80 billion from government debt. The article notes the yield climb tracks economic strength — meaning lower borrowing costs demand a slowdown few are rooting for.
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