Marketplace · Friday, September 25, 2026
Yields on US Treasuries have climbed to around 5% or higher, driven by concerns over the nation's large debt and deficits, as well as rising inflation. Investors are demanding higher rates, a trend also observed globally, with recent oil price increases further fueling inflation worries and expectations of Federal Reserve interest rate hikes.
“Well, there's a few reasons why investors think that the US should be paying higher interest rates on its debt. Uh, one that's been there for a while is that we have very large debts and very large deficits and they're not getting any better, notwithstanding the president's many promises to, uh, balance the budget.”
“The other key thing, of course, is inflation. And this week we saw the price of oil go up. That spells more inflation. When you have that, uh, in people's minds, they worry that the Federal Reserve is going to respond by raising short-term interest rates, yet another reason why they would want higher rates on long-term bonds.”
“And the markets are placing nearly 70% odds on the Fed raising interest rates again in late October.”