The bond market is under sustained pressure, and the damage is spreading across the US economy. The average rate on a 30-year US mortgage has climbed to 7.45%, an increase of 150 basis points in six months and its highest level since 2023, when inflation was running above 6.4%.

The 10-year Treasury yield has gained roughly 30 basis points in two days, including its biggest one-day jump since April 9, 2025 — the session tied to “Liberation Day.” During Thursday’s session, the benchmark 10-year rate surged to 5.18%, a level not seen since 2007, before the global financial crisis and the subsequent recession dragged yields down toward zero. That benchmark fell below 0.50% in 2020 during the COVID shock, and it stood at only 3.97% before the United States and Israel attacked Iran. The climb accelerated after the conflict pushed oil prices higher and brought inflation fears roaring back. The 10-year matters well beyond trading desks because it anchors long-term borrowing costs across the economy, which is why moves of this size reach households and businesses directly.

Inflation Expectations Push Traders to Price a Tougher Federal Reserve

Energy is adding to the problem. Brent crude has moved back above $105 per barrel, and diesel has reached all-time highs. The timing is particularly difficult, because world diesel consumption is entering the season in which demand grows by 2 million barrels per day. Truck drivers now pay twice as much for gasoline as they did nine months ago. Diesel powers most freight, so those fuel costs feed into the price of moving goods across the economy.

US consumers, meanwhile, now expect annual inflation of 4.6% — the third-highest expectation in a year. In light of rising fuel prices, an inflation rate of 4% looks quite reasonable.

The other major shift has taken place at the Federal Reserve. For months, markets avoided any expectation of new rate increases because of the appointment of Kevin Warsh as chair of the Federal Reserve by Donald Trump, who wanted lower interest rates. Eight days ago, however, that reasoning took a blow. Interest rates were raised by 25 basis points, and all policymakers voted for the move. It was the first unanimous vote in more than a year, since May 2025, following several months of debate and votes for rate cuts.

The central bank said, “The Committee will deliver price stability.” Warsh kept the Fed’s 2% inflation target at the center of policy. Traders are now pricing about 100 basis points of additional hikes by next summer. Yields have moved sharply higher across maturities, and the bond market is trading as if officials should have gone with a 50-basis-point increase last week instead of 25.

An attempted move by the US Treasury to calm the market barely changed the direction of yields. Selling continued, and the market barely paused before yields resumed climbing across maturities. Attention now turns to upcoming Treasury auctions and inflation readings, the checkpoints that will show whether demand can absorb the supply at these yields.

Higher Treasury Yields Hit Mortgages, Stocks, Gold and Crypto at Once

Housing is already taking the hit. Long-term US mortgage rates have crossed 7% for the first time since early 2025, and the latest average has reached 7.45%. That makes monthly payments even harder for buyers already facing expensive homes. Mortgage rates tend to move with the 10-year Treasury, which is why the surge in government borrowing costs is flowing directly into home loan pricing.

Stocks are under pressure as well. The US market had moved close to a record earlier this week, but the jump in Treasury yields slowed that rally. Higher government yields also put pressure on gold and cryptocurrencies, because investors can earn more from Treasurys without taking on the same level of market risk.

For crypto traders, that competition matters. Bitcoin and other digital assets pay no fixed yield, and a 10-year Treasury near 5.18% gives investors a much larger return than it did when yields sat near zero — changing how capital gets divided between safer debt and volatile assets.

There is also a supply problem inside the bond market. Washington must sell huge amounts of debt to finance the US deficit, and more issuance means more Treasurys competing for buyers. When demand fails to absorb that supply at existing prices, bond prices fall and yields rise.

The outlook points to inflation of 3% to 4%, or more, through mid-2027. As Cryptopolitan has documented, the buying power of the US dollar has declined by about 40% over the past decade. Continued deficits and inflation would only worsen that position, while the bond market demands increased returns on investment.