U.S. Treasury Yields Reach Multi-Decade Peaks as Deficit Nears $2.1 Trillion

Yields on U.S. Treasury securities rose to their highest levels in decades after recent auctions posted a 10-year note yield of 4.683% and a 30-year bond yield of 5.216%. The increases come as the Congressional Budget Office projects a federal budget deficit of roughly $2.1 trillion for the current fiscal year, while the national debt nears $40 trillion.

Despite the higher yields, demand from both domestic and foreign investors remained steady, with analysts noting no evidence of large-scale selling by “bond vigilantes” concerned about fiscal policy and inflation. The higher yields also make U.S. debt more attractive relative to bonds issued by other developed economies, such as Japan.

"The appetite for Treasurys is still there and it’s just a matter of – at what yield," said Jim Barnes, director of fixed income at Bryn Mawr Trust, adding that yields near 5% on the 10-year and multi-decade highs on the 30-year are likely to draw more buyers.

Higher Treasury yields typically lift mortgage rates, which could increase borrowing costs for homebuyers and affect the housing market. The rise in yields also raises the federal government's debt-service costs, potentially expanding future budget deficits.

The CBO projects net interest costs to exceed $1 trillion in fiscal year 2026, representing about 3.3% of GDP and nearly 14% of federal spending, with costs expected to grow to $2.1 trillion by 2036.