U.S. long-term borrowing costs surge to 16-year highs amid record federal debt and widening deficits, signaling structural economic risks.
The 30-year Treasury yield reached 5.06% at auction, its highest level since 2007, as demand for long-duration debt softened. The move reflects growing concerns over the $39.5 trillion federal debt and a $1.37 trillion fiscal deficit this year, which are crowding out private investment and pushing rates higher.
Yields have more than doubled from roughly 2% in early 2022, underscoring the shift in market sentiment. Despite debates over inflation, Fed policy, and energy prices, economists warn the debt load is becoming a structural risk, with Congress rejecting spending cuts to curb deficits.
The bond market’s warning contrasts with optimism around AI-driven growth and a potential soft landing, but rising long-term rates could pressure equities and corporate borrowing costs.