Bond Market Crisis: US Yields Break Decades-Old Records Amid Economic Boom

The US bond market is in turmoil as yields on government bonds have broken through decades-old records. The 10-year benchmark note yield recently reached its highest level since the dot-com bust, hitting 5.34% and sending shockwaves throughout the financial markets.

This unexpected surge in yields can be attributed to a combination of factors, including a strong economy fueled by massive AI spending, high inflation rates driven by rising fuel costs, and anticipation that the Federal Reserve will continue to raise interest rates to slow down economic growth.

The effects of this bond market downturn are already being felt, with interest rates tied to government bonds, such as mortgages and auto loans, continuing to surge. The 30-year home loan rate topped 7% for the first time since early 2025 last week, making borrowing more expensive for Americans.

The situation is not isolated to the US, with debt concerns and resurgent inflation causing rates to rise globally. The UK's 30-year government bond recently hit 6% for the first time since 1998, while France's 10-year yield rose as high as 4.95% and reached its highest level since 2002.