Marketplace · Thursday, August 13, 2026
Greg Ipp explained that rising long-term bond yields are driven by persistent inflation, a large U.S. federal deficit of $2.1 trillion for the year, and concerns that the Federal Reserve and Congress may not be sufficiently committed to controlling inflation and reducing deficits. These factors lead lenders to demand higher compensation for the risks associated with U.S. Treasury debt.
“And that reflects several things. Number one, inflation is still kind of sticky. So any hope that the Fed would cut short-term rates is kind of like gone out the window, especially with oil prices going high as a result of the war in Iran.”
“Secondly, a lot of people want to borrow, most of all the federal government. We just recently learned that the deficit this year will be $2.1 trillion. A very large number, which is actually $200 billion more than the Congressional Budget Office thought it would be.”
“And third, people are just kind of worried that maybe this federal reserve isn't as committed to low inflation as it should be, and maybe this government and our Congress aren't as committed to eventually getting deficits down as much as they should.”