BlockBeats report: On May 24, according to the Financial Times, as the U.S.-Iran conflict continues to push up oil prices and inflation expectations, U.S. Treasury yields have risen to their highest levels since 2007, potentially requiring American taxpayers to bear an additional billions of dollars in interest payments. Data shows that the yield on the 10-year U.S. Treasury note has risen to 4.58%, above the Congressional Budget Office’s (CBO) previous forecast of 4.13%; the 30-year U.S. Treasury yield has reached its highest level since 2007.
If current yield levels persist through the end of this fiscal year, U.S. government interest expenses will increase by an additional $8 billion; if they remain elevated throughout the entire 2027 fiscal year, additional interest costs will exceed $30 billion. Market participants are concerned that rising oil prices and expanding fiscal deficits will further fuel inflation and intensify selling pressure on U.S. Treasuries. Some Wall Street investors believe the Federal Reserve is currently underreacting to inflation risks, and that "bond vigilantes" have regained control of the market.
In addition, as long-term interest rates rose rapidly, U.S. mortgage rates climbed in tandem, prompting market discussions about potential interventions such as the Treasury increasing issuance of ultra-short-term bonds or the Federal Reserve restarting operations similar to "Operation Twist."