Conflict and Tariffs Fuel Soaring US Yields

A plan to lower financing costs for Americans by focusing on the 10-year Treasury yield has failed, according to recent data. In 2017, Scott Bessent and Donald Trump discussed bringing down long-term interest rates through policies rather than direct pressure on the Federal Reserve.

The idea was to make borrowing cheaper for consumers, but the strategy hasn't worked out as planned. The 10-year Treasury yield has risen to its highest level in decades, reaching over 5% in October 2023 and now hovering near that mark.

The recent escalation of conflict in the Middle East has exacerbated the situation, with yields increasing by more than 70 basis points since Israel's attack on Iranian leaders. As a result, mortgage rates have risen to an average of 6.81%, the highest in a year, according to the Mortgage Bankers Association.