U.S. Treasury 10-Year Yield Reaches 4.44 Percent

Interest rates on the 10-year U.S. Treasury note reached 4.44 percent, up from 3.95 percent before the Iran war began at the end of February. Mortgage rates climbed to their highest levels in nine months and auto sales fell. The increase followed an energy price spike tied to the Iran war that raised inflation expectations.

Rates on government bonds also rose in other countries facing similar pressures from higher projected inflation and larger debt loads.

Budget deficit and debt service costs President Trump stated last week that a fraud task force led by Vice President JD Vance would produce large savings. He has previously cited tariff revenue, payments from a proposed “Gold Card” visa program, spending cuts by the Department of Government Efficiency, and faster economic growth as ways to reduce the roughly $1.8 trillion annual deficit.

Jessica Riedl, a budget and tax fellow at the Brookings Institution, said the cost of servicing the national debt has tripled since 2021 to more than $1 trillion a year. She added that a tax cut bill signed by President Trump would likely add $5 trillion to $10 trillion to 10-year deficits.

Kent Smetters of the Penn Wharton Budget Model estimated that 60 percent of the rise in 30-year Treasury yields stems from expectations of continued large borrowing and 40 percent from inflation linked to the Iran war and tariffs.

Political responses Democratic candidates in several House and Senate races are citing higher borrowing costs in their campaigns. In Colorado’s fifth congressional district, candidate Jessica Killin said persistent deficits and higher interest rates make it harder for residents to buy homes, purchase cars, or manage credit card debt.

Treasury Secretary Scott Bessent said the administration inherited the largest budget deficit in history and aims to reduce the annual deficit to 3 percent of gross domestic product. He cited a Government Accountability Office report estimating $233 billion to $521 billion in annual fraudulent spending.

Glenn Hubbard, a Columbia University professor and former chairman of the White House Council of Economic Advisers, said the United States may lack the borrowing capacity it had during the 2008 financial crisis or the coronavirus pandemic to respond to future shocks.