The bond market is in a state of unrest.
For now, policymakers in Washington are shrugging it off
Yields on 30-year Treasury bonds — a government bond that underpins long-term borrowing — climbed to 5.10% on Friday. Earlier in the week, they had surged to 5.2%, the highest level since 2007, when the financial crisis started taking root. It’s an identical story for 10-year bonds, which are connected to credit card debt, mortgages, and car loans.
The yield on 10-year bonds are near 4.6%, their highest level in a year. These aren’t inconsequential movements: Even these small yield increases can add up to $2 trillion to the federal debt over 10 years. Now bond traders are surrendering to the fear of inflation that’s here to stay, elevating the stakes for Washington policymakers steering an economy under mounting strain.