Bond Market Loss of Respect Triggers Higher Mortgage Rates

The bond market has lost some respect in recent times, according to Kevin Warsh, Fed boss. Long-term Treasury yields have crept up near 5.25%, their highest since 2007.

This increase is causing higher rates on 30-year fixed mortgages, now at around 6.6% in the US, their highest since August 2025. Higher yields also tighten financial conditions and constrain growth.

The Fed kept interest rates unchanged at 3.5% to 3.75%, as voted by the Federal Open Market Committee (FOMC) last week. This decision perplexed some people, given the new goal of price stability, which is inflation at 2%.