Soaring Borrowing Costs Raise Alarm for US Economy

US Treasury yields have hit near-quarter-century highs, sparking concerns about the broader economic impact of soaring borrowing costs. The recent rebound in Treasurys came after yields surged, reflecting investor anxiety over persistent inflation and rising debt levels. Economists are particularly concerned about a potential European debt crisis, but the US is also feeling the strain.

Commercial real estate deals in the US are now facing uncertainty as buyers push for better terms, while lower-rated corporate borrowers are seeing sharp increases in interest rates. Goldman Sachs economists have warned that elevated yields could shave 0.2 percentage points off US GDP growth next year, potentially derailing the stock market rally and pressuring the government to focus on deficit reduction.