Rising bond yields threaten to push up U.S. borrowing costs, experts say

U.S. Treasury yields climbed Tuesday as a global bond sell-off threatened to increase borrowing costs for American households. The 10-year Treasury yield rose to 4.78%, from 4.75% late Monday, reaching its highest level since January 2025. The 2-year yield rose to 4.37%, while the 30-year yield hovered around 5.25%.

A Bloomberg gauge of global bond yields reached 3.72%, its highest level since June 2008. Investors have been selling government bonds amid persistent inflation and concerns over government debt, pushing yields higher as they seek more compensation for risk.

James Reilly, a senior markets economist at Capital Economics, said fiscal concerns, rising energy prices and AI-related investment had lifted long-term government bond yields across major economies to multi-decade highs.

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Fiscal concerns, rising energy prices and AI-related investment have lifted long-term government bond yields across major economies to multi-decade highs.

The latest rise also reflects concern that renewed U.S.-Iran tensions could push oil prices higher and add to inflation. Morningstar said the flare-up had raised fears that central banks could increase interest rates to counter higher energy costs. Federal Reserve Chairman Kevin Warsh said last week that the central bank would have “work to do” if inflation failed to ease. Traders now put the chance of a September rate increase at 66%, according to CME Group’s FedWatch tool.

Bond-market movements affect everyday borrowing and saving. Higher government yields can raise the cost of mortgages, auto loans and other credit, while increasing the interest consumers earn on some savings accounts.

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work to do