US Treasuries Face Higher-Rate World Amid Rising Yields

Investors in US Treasuries are facing a harsh reality: a higher-rate world is here to stay. Despite repeated calls from President Donald Trump for the Federal Reserve to lower rates, yields on these supposedly risk-free bonds have been rising steadily.

The 10-year Treasury note has climbed to its highest level in two decades, reaching as high as 5.04% in September before edging back down to around 4.99%. The 30-year bond peaked at 5.37%, also a two-decade high.

But the upward pressure on yields is unlikely to let up. The US government's national debt has more than doubled since 2016, exceeding $40 trillion. Higher rates raise the interest burden and widen the budget deficit, while economic growth running hot increases inflation risks.

According to Federal Reserve Chair Kevin Warsh, another factor driving up yields is competition for capital. 'The so-called hyperscalers are out in the market raising funding,' he said, implying that investors have more options than ever before and will only accept higher returns.