The US government and other entities feel mounting pressure as debt increases.

crypthub

3 days ago

Rising Long‑Term Yields

Long‑dated US bond yields have returned to 2009 levels as investors demand extra compensation for large deficits, stubborn inflation and doubts about central‑bank independence. Traders see the end of the rate‑cut cycle and a possible shift to new hikes in several economies. Higher yields reflect the risk that fixed payments must be honored over decades.

Global Debt Pressures

World sovereign debt topped $324 trillion in early 2025, driven by borrowing after the 2008 crisis and the pandemic when rates were near zero. As inflation surged and central banks raised policy rates, many governments began selling the bonds they once bought, pushing yields higher. In the US, proposed legislation could add $3.4 trillion to deficits, heightening concerns about debt service costs.

Political Influence on Bonds

President Trump’s criticism of Fed Chair Powell and the prospect of a new chair favored by the White House have added uncertainty to rate outlooks. Investors fear politically‑driven rapid cuts could reignite inflation, widening term premia. This political risk is prompting a search for higher yields to compensate for potential market volatility.

Economic Implications

Rising long‑term yields raise borrowing costs for mortgages, auto loans and corporate debt, squeezing households and slowing growth. Persistent high yields may trigger a “doom loop” where debt burdens rise while economies weaken, raising stagflation risks. Past bond‑vigilante episodes show that markets can force policy changes when yields become untenable.